Australian annotated class actions legislation [2nd edition.] 9780409347470, 0409347477

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Annotated Class Actions Legislation 2nd Edition

Dedication Michael Legg dedicates this text to Laetitia, Maxime and Alexandre. Ross McInnes dedicates this text to Lucy, Sam, Tom (and Ripley).

Annotated Class Actions Legislation 2nd Edition

Michael Legg B Com (Hons), M Com (Hons), LLB (UNSW), LLM (University of California, Berkeley)

Ross McInnes B Jurisprudence/Laws, UNSW Master Laws/Management, AGSM, UNSW

LexisNexis Butterworths

Australia 2018

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National Library of Australia Cataloguing-in-Publication entry Creator: Title: Edition: ISBN: Notes: Subjects: Other Creators/Contributors:

Legg, Michael, author. Australian annotated class actions legislation / Michael Legg, Ross McInnes. 2nd edition. 9780409347463 (pbk). 9780409347470 (ebk). Includes index. Class actions (Civil procedure) — Australia. Actions and defenses — Australia. Civil procedure — Australia. McInnes, Ross, author.

© 2018 Reed International Books Australia Pty Limited trading as LexisNexis.

First edition 2014. This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Arial, Helvetica LT Std, Goudy. Printed by Griffin Press, Australia. Visit LexisNexis Butterworths at www.lexisnexis.com.au

Foreword The year 2017 has marked the twenty-fifth consecutive year of the operation of the federal class action regime in Australia. Over that period, Part IVA of the Federal Court of Australia Act 1976 (Cth) has provided the Commonwealth legislative architecture to accommodate an increasing diversity of class action proceedings — from personal injury claims, shareholder and investor claims to disaster and environmental claims. At the present time, the momentum for class action litigation continues, a trend that is reflective of a significant growth in commercial third party litigation funders and structural changes to the Australian legal market, including the advent of legal practices offering specialised services in the area. Class action litigation is often complex, not least because it involves a significant number of class members and is attended by unique procedural concerns from commencement to the interlocutory stages, opting-in and opting-out procedures, expert evidence and the form of settlement agreements. For that reason it is of paramount importance that these types of matters are administered with an eye to efficiency and fairness. Whether the parties avoid an unnecessary blow-out of costs in class action proceedings will depend on conscious and principled decisions taken by solicitors and counsel, both before and during the course of the proceeding. Only in that way can class actions function as a socially useful form of litigation. In light of these procedural complexities and challenges, there is apparent need for a lucid and up-to-date statement on the law regulating this branch of litigation. Practitioners need to grasp the judicial commentary on the relevant sections as well as have a solid global understanding of the overall architecture and purpose of class action regimes as they operate in Australia. This text (now in its second edition) facilitates such understanding in a manner that is both clear to navigate as well as thorough in its analysis, directing the reader to the relevant legislation and commentary. As in the

first edition, the authors have made judicious choices in quoting those extracts of the case law that speak most directly to the relevant principles. The fact that the text sets out the relevant provisions for those states (Victoria, New South Wales and Queensland) that have introduced class action legislation based on the federal regime serves as a highly useful comparative resource. I extend my warmest congratulations to Associate Professor Michael Legg and Mr Ross McInnes for the second edition of a meticulously researched and highly useful text for practitioners, judges and any person with an interest in class action proceedings in this country. Chief Justice James Allsop Federal Court of Australia 25 September 2017

Publisher’s Note The publisher, authors, contributors and endorsers of this publication each excludes liability for loss suffered by any person resulting in any way from the use of, or reliance on, this publication. © LexisNexis. The legislation reproduced in this work does not purport to be an official or authorised version.

Preface Since the publication of the first edition of this text, class action jurisprudence has continued to develop in Australia, making it timely for an update in this second edition. Class action litigation continues to develop as a distinct and specialised area of practice. A thorough knowledge of the class actions legislation is mandatory for anyone practising in the area. This work provides a section-by-section analysis of the legislative regimes in the Federal Court, Victoria, New South Wales and Australia’s newest class action regime in Queensland. It also provides analysis of relevant case law, discussion of key concepts and reference to useful extrinsic materials such as law reform reports and practice notes. The text also includes real examples of class action pleadings and court ordered opt-out notice publications. Michael Legg Ross McInnes October 2017 Sydney

Acknowledgments Considering, researching and writing about each provision in the class actions legislation was a major task and we would like to thank those who assisted us in this undertaking. Michael Legg would like to thank: his UNSW Law students who undertook the courses Resolving Civil Disputes and/or Complex Civil Litigation for their inquisitiveness on the subject of class actions; legal practitioners and litigation funders in the class actions space who have always been ready to share their views on various class actions controversies. Ross McInnes would like to thank: Grace Feehan, for her dedication to the project, and to the team of Clayton Utz researchers and contributors to chapters, Bonnie Perris, Madeleine McCloy, Naomi Zhang, Jessica McMahon, Christabel RichardsNeville, Blair McEwan, Grace Ness, Justin Lipinski, William Atfield and Declan Hughes. Both authors would like to thank Georgina Gordon who commissioned the book on behalf of LexisNexis Butterworths and who has shepherded us and the text through the production process.

Table of Cases References are to paragraphs

A A v Schulberg (No 2) [2014] VSC 258 …. 22.36 Advanced Switching Services Pty Ltd v State Bank of New South Wales T/as Colonial State Bank (2001) 23 ATPR 41–848 …. 2.40 Ah Toy v Registrar of Companies (1985) 10 FCR 280; 61 ALR 583 …. 28.5 Ahmed v Chowdhury [2012] NSWSC 1452 …. 2.3, 2.31 Allphones Retail Pty Ltd v Weimann [2009] FCAFC 135 …. 2.27, 2.37, 4.8, 4.10 Amchem Products, Inc v Windsor 521 US 591 (1997) …. 20.6 Andrews v Australian and New Zealand Banking Group Ltd (2011) 281 ALR 113; [2011] FCA 388 …. 1.57, 26.17, 32.13 AS v Minister for Immigration (Ruling No 7) [2017] VSC 137 …. 1.45, 4.1, 15.1, 15.24, 15.38 Asquith Rugby League Club Ltd v Capital Finance Australia Ltd [2011] FCA 110 …. 11.16 Au Domain Administration Ltd v Domain Names Australia Pty Ltd (2003) 202 ALR 127 …. 4.5, 4.28, 13.5 Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (2008) 251 ALR 166 …. 9.27 — v — [2010] FCA 1302 …. 11.24, 20.16 — v — (No 5) [2009] FCA 1464 …. 11.24 Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250; 142 ALR 177; 22 ACSR 539 …. 5.15, 6.4, 22.1, 22.3, 22.5, 22.7, 22.40, 22.45, 34.7, 34.9, 34.13

— v Giraffe World Australia Pty Ltd (1998) 84 FCR 512; 156 ALR 273; [1998] FCA 819 …. 4.8, 4.9, 5.15, 14.2, 15.15, 31.20, 34.3, 34.11 — v — (1999) 95 FCR 302 …. 15.35 — v Internic Technology Pty Ltd (1998) ATPR 41-646; [1998] FCA 818 …. 14.7 Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc (1998) 83 FCR 424; ATPR 41-638; [1998] FCA 598 …. 4.6, 4.37, 5.15, 6.6, 6.7, 6.12, 14.6, 20.5, 26.6, 26.7, 26.11, 26.19, 34.7, 34.13 Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493; 28 ALR 257 …. 5.3, 5.15, 5.16 Australian Securities and Investments Commission v Richards [2013] FCAFC 89 …. 1.75, 22.1, 22.2, 22.3, 22.16, 22.17, 22.19, 22.25, 22.38 Australian Telecommunications Commission v Colpitts (1986) 12 FCR 395 …. 28.6 AWB Ltd No 10, Re [2009] VSC 566 …. 12.7

B Banksia Securities Ltd (rec & mgr apptd), Re [2017] VSC 148 …. 32.7 Banque Commerciale SA v Akhil Holdings (1990) 169 CLR 279 …. 9.13 Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247; 155 ALR 684; [1998] HCA 49 Bates v Dow Corning (Aust) Pty Ltd [2005] FCA 927 …. 22.29 Batten v Container Terminal Management Services Ltd [2001] FCA 1493 …. 4.18, 15.3 Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51 …. 22.30 Birchall, Re (1880) 16 Ch D 41 …. 20.1 Blairgowrie Trading Ltd v Allco Finance Group Ltd (recrs & mgrs apptd) (in liq) (2015) 325 ALR 539; [2015] FCA 811 …. 5.6, 5.22, 6.1, 11.6, 11.20, 22.69, 24.9, 24.21, 26.4, 26.15, 27.5, 31.13, 31.16, 32.8, 32.36, 35.13, 35.14

— v — (No 3) [2017] FCA 330 …. 1.49, 9.27, 22.35, 22.37, 22.69, 32.34 Boeing Company v Van Gemert 444 US 472 (1980) …. 35.11 Boyce v Paddington Borough Council [1903] 1 Ch 109 …. 5.15, 5.16 Boyle v Giral 820 A 2d 561 (DC, 2003) …. 26.9 Brandi v Mingot (1976) 51 ALJR 207 …. 12.7 Brannaghan v Thiess Pty Ltd and Degremont Pty Ltd (t/as Thiess Degremont Joint Venture) [2013] FCA 790 …. 32.10, 32.54 Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317; 200 ALR 607; [2003] FCAFC 153 …. 1.18, 1.38, 4.8, 4.15, 4.18, 4.19, 4.44, 14.12, 33.1, 33.3, 33.4, 33.5, 33.7, 33.9, 33.19, 33.20, 33.22, 33.24, 33.27 — v — (2003) ATPR 41-906; [2002] FCA 1405 …. 4.25, 4.35, 4.49, 9.6, 14.5, 14.12, 33.3 — v — [2003] FCA 1505 …. 2.22, 2.40, 11.1, 11.2, 11.5, 11.6, 11.12, 11.16, 11.18, 11.20, 17.22, 22.7, 22.29, 31.18 Breen v Williams (1996) 186 CLR 71 …. 2.21 Bright v Femcare Ltd (1999) 166 ALR 743; [1999] FCA 1377 …. 6.1, 9.15, 19.1 — v — (2000) 175 ALR 50 …. 4.18, 4.25 — v — (2001) 188 ALR 633 …. 15.28 — v — (2002) 195 ALR 574; [2002] FCAFC 243 …. 1.11, 1.43, 4.18, 4.24, 4.28, 9.1, 9.17, 14.1, 15.3, 15.5, 15.6, 15.7, 15.10, 15.11, 15.12, 15.15, 15.17, 15.22, 15.23, 15.24, 15.28, 17.3, 17.22, 32.11 — v — [2002] FCA 11 …. 31.2, 31.9, 31.19 Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd [2011] FCA 106 …. 4.30, 11.2, 11.3, 11.16, 11.19, 15.11, 15.22, 31.10, 31.12, 31.17 — v — (No 2) [2012] FCA 1112 …. 21.2, 22.13 Burns Philp & Co Ltd v Bhagat [1992] 1 VR 203 …. 2.31 Burwood Council v Ralan Burwood Pty Ltd (No 2) [2014] NSWCA 179 …. 1.9 Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 …. 28.15

C Caason Investments Pty Ltd v Cao [2014] FCA 1410 …. 11.5 — v — (2015) 236 FCR 322 …. 9.4 Cadence Asset Management Pty Ltd v Concept Stores (2006) ACSR 435 …. 9.15 Callery v Gray [2001] 3 All ER 833 …. 33.6 Cameron v Qantas Airways Ltd (1993) ATPR ¶41-251 …. 9.13 Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 …. 22.4, 22.13, 22.15, 22.36, 32.25 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; 229 ALR 58; [2006] HCA 41 …. 1.3 Camping Warehouse v Downer EDI (Approval of Settlement) [2016] VSC 784 …. 32.2, 32.7 Camping Warehouse Australia Pty Ltd (formerly Mountain Buggy Australia Pty Ltd) v Downer EDI Ltd [2015] VSC 122 …. 32.48 Capic v Ford Motor Company (No 2) [2016] FCA 1178 …. 11.7, 11.21, 33.1, 33.2, 33.5, 33.19 Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398; 127 ALR 76; [1995] HCA 9 …. 4.30, 4.48, 20.7, 20.14, 22.2, 28.12, 28.22, 28.28, 33.13 Carr v Commins Hendriks Pty Ltd [2016] FCA 1282 …. 15.5, 15.8, 15.11, 15.37, 16.3 Casey v State Trustees Ltd [2010] FCA 163 …. 32.42, 32.54 Cash Converters International Ltd v Gray (2014) 223 FCR 139; 314 ALR 154; [2014] FCAFC 111 …. 1.18, 4.15, 4.49, 5.13, 5.23 Cendant Corp Securities Litigation, Re, 404 F 3d 173, 198 (3rd Cir, 2005) …. 2.21 Central Railroad & Banking Co v Pettus 113 US 116 …. 35.11 Ceramic Fuel Cells Ltd (in liq) v McGraw-Hill Financial, Inc (2016) 245 FCR 340 …. 32.10 Chen Zhen Zi v Minister for Immigration & Ethnic Affairs (1994) 48 FCR 591; 121 ALR 83 …. 29.4

City of Swan v McGraw-Hill Companies, Inc [2016] FCA 343 …. 1.75, 22.15, 22.22 — v McGraw-Hill Financial Inc (2014) 223 FCR 328; [2014] FCA 931 …. 4.31, 4.50, 9.12, 9.26, 11.2 Clarke v Great Southern Finance Pty Ltd (in liq) [2014] VSC 569 …. 12.4, 12.8, 32.2 — v — [2014] VSC 516 …. 22.2, 22.11, 22.32 — v — (No 2) [2012] VSC 338 …. 12.1, 12.3, 12.5, 12.7 Clasul Pty Ltd v Commonwealth [2016] FCA 1119 …. 22.37 Clime Capital Ltd v Credit Corp Group Ltd (No 3) [2012] FCA 218 …. 22.18 Clurname Pty Ltd v Commonwealth Bank of Australia (No 1) [2015] FCA 153 …. 11.10, 11.23 Collin v Aspen Pharmacare Australia Pty Ltd [2013] FCA 952 …. 22.27 — v — [2013] FCA 1336 …. 22.21 Commonwealth v Kamasaee [2017] VSCA 121 …. 1.71 Community & Public Sector Union v Commonwealth (1999) 94 FCR 146; [1999] FCA 653 …. 6.5, 6.13 — v Crown in Right of the State of Victoria (1999) 90 IR 4; [1999] FCA 743 …. 2.3, 17.16, 19.5 Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723 …. 4.30, 15.11 Construction, Forestry, Mining and Energy Union v Contract Blinds Pty Ltd [2009] FCA 572 …. 32.54 Cook v Pasminco Ltd (2000) 99 FCR 548; [2000] FCA 677 …. 8.5 — v — [2000] VSC 534 …. 9.4 Cooper v Federal Reserve Bank of Richmond [1984] USSC 141; 104 S Ct 2794 (1984) …. 28.25 County of Suffolk v Long Island Lighting Co 907 F 2d 1295 (2nd Cir, 1990) …. 22.62 Courtney v Medtel Pty Ltd [2001] FCA 1037 …. 25.5, 25.18, 25.23, 25.34 — v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 …. 2.9, 2.12,

2.29, 6.1, 10.17, 16.1, 17.21, 17.22, 22.7, 22.41, 28.2, 31.20, 32.4, 32.8, 32.52, 32.53, 32.63, 32.69, 35.7, 35.16 — v — (2003) 126 FCR 219 …. 28.29 — v — (No 4) [2004] FCA 1233 …. 25.23 — v — (No 5) (2004) 212 ALR 311; [2004] FCA 1406 …. 22.3, 22.37 Crawford v Bank of Western Australia Ltd [2005] FCA 949 …. 24.10, 24.15 — v Equifax Payment Services, Inc, 201 F 3d 877 (7th Cir, 2000) …. 2.21 Cutts v Head [1984] Ch 290 …. 32.53

D Darcy v Medtel Pty Ltd [2002] FCA 925 …. 10.11, 11.17, 32.10, 32.56, 32.64 — v — (No 3) [2004] FCA 807 …. 31.3 Dare v Pulham (1982) 148 CLR 658 …. 9.13 Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322; (2007) ATPR 42-134; [2006] FCA 1388 …. 1.49, 22.1, 22.3, 22.13, 22.14, 22.15, 22.22, 22.23, 22.36, 22.37, 22.46, 22.60, 32.10 De Brett Seafood Pty Ltd v Qantas Airways Ltd (No 7) [2015] FCA 979 …. 1.75 De Jong v Carnival PLC (proceeding no 2015/254964) …. 9.27 — v Carnival PLC (No 3) [2016] NSWSC 1461 …. 33.4, 33.5, 33.9, 33.20 Deposit Guaranty National Bank v Roper 445 US 326 50 (1980) …. 22.63 Diab Pty Ltd v YUM! Restaurants Australia Pty Ltd [2016] FCA 43 …. 26.3 Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; 67 IPR 124; [2005] FCA 1483 …. 5.1, 5.5, 6.1, 9.8, 9.9, 9.11, 9.23, 9.24, 9.25, 10.1, 10.13, 13.7, 14.8, 22.49, 31.10 — v — (2008) 67 ACSR 569; [2008] FCA 1311 …. 1.66, 1.67, 22.19 — v — [2009] FCA 19 …. 22.37, 22.48, 32.10, 32.36 Downie v Spiral Foods Pty Ltd [2015] VSC 190 …. 7.8, 7.10, 22.2, 22.5, 22.11, 22.13, 22.15, 22.23, 22.36, 22.37, 32.22 Driclad Pty Ltd v Commissioner of Taxation (1968) 121 CLR 45 …. 28.5 Duval-Comrie v Commonwealth (proceeding no VID1367/2013) …. 9.27

E Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; 324 ALR 316; 106 ACSR 49; [2015] FCA 328 …. 1.34, 17.2, 17.9, 17.21, 17.22, 18.4, 32.7, 32.8, 32.9, 32.70 — v — [2016] FCA 1433 …. 22.35, 22.37, 26.2, 26.15, 26.18, 32.10, 32.26, 32.33, 35.6 — v Sigma Pharmaceuticals Ltd [2012] FCA 149 …. 32.51 EEOC v Childrens Hospital Medical Centre 702 F 2d 188 …. 28.25 Eisen v Carlisle & Jacquelin (1974) 417 US 156 …. 25.22 Eshelby v Federated European Bank Ltd [1932] 1 KB 254 …. 11.13, 11.14, 11.15 Esposito v Commonwealth [2015] FCA 3 …. 25.18

F Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52 …. 32.8 Falfire Pty Ltd v Roger David Stores Pty Ltd [1996] FCA 853 …. 13.4, 13.6, 13.8, 15.15 — v — [1996] FCA 1803 …. 13.1 Farey v National Australia Bank Ltd [2014] FCA 1242 …. 10.2, 10.17, 11.11, 32.10, 32.36, 32.44 — v — [2016] FCA 340 …. 22.23, 22.31, 22.33, 26.2 Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 …. 1.11, 3.7, 4.25, 5.1, 5.4, 6.1, 7.9, 9.21, 14.1, 15.17, 24.7, 25.1, 25.15, 25.22, 25.26, 25.28, 25.30, 25.34, 28.12, 28.27 Fencott v Muller (1983) 152 CLR 570; 46 ALR 41 …. 8.1 Fernando v Ruddock (as Minister for Immigration & Multicultural Affairs) [2000] FCA 1151 …. 28.9, 28.14, 29.4 Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 …. 33.13 Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 89 FCR 417; [1999] FCA 59 …. 2.27, 2.34, 2.35, 2.36, 2.39 — v — (1999) 94 FCR 179; 166 ALR 141; [1999] FCA 1250 …. 4.11, 5.16,

31.20 Foley v Gay [2016] FCA 273 …. 22.11, 32.27, 32.54 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 …. 33.13 Francey v Sharpe Development Group Pty Ltd [2005] FCA 1059 …. 15.9, 20.3

G Gararimabu v BHP & Ok Tedi [2001] VSC 304 …. 25.24 General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation, Re, 55 F 3d 768 (3d Cir, 1995) …. 22.15, 22.62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 …. 3.10 Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 …. 24.11, 24.16 Gibson v Malaysian Airline System Berhad [2016] FCA 1470 …. 4.7, 4.51 — v — (No 2) [2017] FCA 701 …. 11.2, 11.3, 11.19, 31.12, 31.17 Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569 …. 28.5 Giles v Commonwealth [2014] NSWSC 83 …. 1.14, 15.7, 15.18, 15.22, 15.24 Girsh v Jepson 521 F 2d 153 (3rd Cir, 1975) …. 22.62 Gold Coast Council v Pioneer Concrete (Qld) Pty Ltd (1997) ATPR 41-585 …. 15.7 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; 194 ALR 337; [2002] HCA 54 …. 26.1, 32.3 — v — (No 2) [2000] FCA 1220 …. 35.9, 35.22 Green v Barzen Pty Ltd (formerly Dukes Financial Services Pty Ltd) [2008] FCA 920 …. 4.26, 15.16, 18.2 Guglielmin v Trescowthick [2004] FCA 326 …. 4.25 — v — (No 2) (2005) 220 ALR 515; [2005] FCA 138 …. 4.19, 4.22, 4.26, 4.27, 4.30, 4.33, 4.45, 6.1, 6.4, 15.2, 15.3, 15.18, 15.24, 26.11, 26.17 — v — (No 5) [2006] FCA 1385 …. 22.21, 22.37

Gui Sen Huang v Minister for Immigration and Multicultural Affairs (1997) 50 ALD 134 …. 15.5

H Hadchiti v Nufarm Ltd [2012] FCA 1524 …. 22.13 Hall v Australian Finance Direct Ltd (No 2) [2007] VSC 233 …. 15.6, 15.9, 15.10, 15.11 — v — (No 3) [2007] VSC 366 …. 17.13 Hansberry v Lee 311 US 32 (1940) …. 20.6 Harrison v Lidoform Pty Ltd (rec & mgr apptd) (FCA, Hely J, 24 November 1998, unreported) …. 9.13, 9.15 — v Sandhurst Trustees Ltd [2011] FCA 541 …. 22.30 Haslam v Money For Living (Aust) Pty Ltd (admin apptd) [2007] FCA 897 …. 22.13, 22.15 Hassid v Queensland Bulk Water Supply Authority t/as Seqwater [2017] NSWSC 599 …. 31.3, 32.17 Henry v Henry (1996) 185 CLR 571 at 591; [1996] HCA 51 …. 12.7 HFPS Pty Ltd (Trustee) v Tamaya Resources Ltd (in liq) (No 3) [2017] FCA 650 …. 22.35 Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd [2011] FCA 801 …. 1.49, 22.13, 22.18, 22.37 — v — (No 2) [2011] FCA 1506 …. 32.10 Hodges v Waters (No 5) [2014] FCA 965 …. 32.10 Hopkins v AECOM Australia Pty Ltd, Federal Court of Australia NSD757/2012, 3 May 2016 …. 1.63 — v — (No 8) [2016] FCA 1096 …. 1.49, 32.10 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 …. 2.21 Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 …. 2.21 Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326; 46 ATR 375 …. 4.18, 9.13

Hurley v McDonald’s Australia Ltd [2001] FCA 209 …. 32.68, 32.69

I Inabu Pty Ltd v Leighton Holdings Ltd [2014] FCA 622 …. 10.7, 10.17, 22.37, 32.10, 32.42, 32.44 — v — (No 2) [2014] FCA 911 …. 22.37

J Jackson v GP & JM Bruty Pty Ltd (Ruling No 1) [2016] VSC 717 …. 36.7 Jakes v Hospital Corporation of Australia (FCA, Wilcox J, 12 June 1998, unreported) …. 11.6 James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 …. 3.3 Jameson v Professional Investment Services Pty Ltd (2009) 72 NSWLR 281; [2009] NSWCA 28 …. 2.31, 15.26 Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2008] FCA 575 …. 10.9, 24.13 — v — [2011] FCA 671 …. 1.78, 22.1, 22.21, 22.22, 22.37, 32.10 — v — [2011] FCA 1402 …. 32.10 Jarrama Pty Ltd v Caltex Petroleum Pty Ltd [2004] FCA 1114 …. 32.42 Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572; 124 ALR 605; ATPR 41-349 …. 26.24, 28.4, 28.8, 28.11, 28.17, 29.4, 29.9 Johnson v General Motors Corporation [1979] USCA5 1028; 598 F 2d 432 (5th Cir 1979) …. 28.25 Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167; 166 ALR 731; [1999] FCA 1363 …. 2.12, 2.13, 2.29, 2.30, 22.20, 22.65, 32.10, 35.1, 35.24 — v — (1999) ATPR 41-679; [1999] FCA 56 …. 1.51, 4.26, 4.31, 15.14, 28.11 — v — (2000) 104 FCR 564; [2000] FCA 1572 …. 6.8, 8.2, 8.4 — v — [2001] VSC 284 …. 25.18 — v — [2003] VSC 27 …. 1.70, 18.12

— v — (No 2) [2003] VSC 212 …. 5.18, 18.2, 18.5, 18.10, 18.12, 28.8, 33.10, 36.8 — v — (No 3) [2001] VSC 372 …. 17.2, 17.20, 17.21, 32.70 Johnston v Endeavour Energy [2015] NSWSC 1117 …. 1.34, 2.4, 5.11, 5.24, 32.7 Johnstone v HIH Ltd [2004] FCA 190 …. 32.3, 32.10 Jones v Treasury Wine Estates Ltd (2016) 241 FCR 111 …. 32.10 — v — (No 2) [2017] FCA 296 …. 10.7, 10.18, 25.22, 25.28, 32.43, 32.72, 36.1 Jonsandi Transport Pty Ltd v Paccar Australia Pty Ltd (No 2) [1999] FCA 1788 …. 15.2

K Kamasaee v Commonwealth (proceeding no 2014/06770) …. 9.27 — v — (No 8) [2017] VSC 167 …. 36.5, 36.7 — v — (No 10) [2017] VSC 272 …. 1.71, 1.72 Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35; 137 ALR 544 …. 3.4 Kelly v Willmott Forests Ltd (in liq) (2012) 300 ALR 675; [2012] FCA 1446 …. 1.38, 33.5 — v — (No 2) [2013] FCA 732 …. 33.4, 33.27 — v — (No 3) [2014] FCA 78 …. 33.4, 33.26 — v — (No 4) (2016) 335 ALR 439; [2016] FCA 323 …. 17.2, 17.22, 18.4, 18.11, 22.1, 22.3, 22.11, 22.12, 22.15, 22.19, 22.32, 22.68, 35.6 — v — (No 5) [2017] FCA 689 …. 22.37, 22.68 Ketteman v Hansel Properties Ltd [1987] AC 189 …. 11.3, 11.19, 31.17 King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 121 FCR 480; 191 ALR 697; [2002] FCA 872 …. 2.9, 2.40, 6.4, 11.6, 11.20, 17.22, 22.7, 22.45, 32.10, 32.53, 35.8, 35.19 — v — [2002] FCA 364 …. 10.11, 32.10, 32.42, 32.56 — v — [2002] FCA 1560 …. 31.20, 32.62, 32.68 — v — [2003] FCA 980 …. 22.21, 22.37, 26.11

— v — [2003] FCA 1420 …. 22.19 — v GIO Australia Holdings Ltd (2000) 100 FCR 209; 174 ALR 715; [2000] FCA 617 …. 4.8, 4.12, 4.18, 4.33, 4.40, 9.27, 31.20 — v — [2000] FCA 1869 …. 18.7, 18.8, 25.14, 25.32 — v — [2001] FCA 270 …. 10.15, 17.13, 18.6, 24.2, 25.15, 25.33, 25.34, 32.28, 32.51, 35.3, 35.18 — v — [2001] FCA 1487 …. 24.3, 24.17 Kirby v Centro Properties Ltd (2008) 253 ALR 65; [2008] FCA 1505 …. 1.53, 4.31, 15.14, 32.10, 32.14 — v — (2010) 189 FCR 301; [2010] FCA 1115 …. 4.19, 4.34, 21.2 — v — (No 6) [2012] FCA 650 …. 1.49, 22.13, 22.37 Konneh v New South Wales (No 3) (2013) 235 A Crim R 191; [2013] NSWSC 1424 …. 1.58, 26.17

L Lake v Lake [1955] P 366 …. 28.5 Lam v Rolls Royce PLC (No 5) [2016] NSWSC 1332 …. 31.6 Larsson v WealthSure Pty Ltd [2013] FCA 926 …. 1.44, 9.12, 15.9 Lee v Bank of Queensland Ltd [2014] FCA 1376 …. 22.22 Leung v American International Assurance Co (Aust) Ltd [2004] FCA 1763 …. 15.7 Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678; [1999] FCA 104 …. 7.8, 7.12, 22.2, 22.11, 22.37, 32.42 Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 …. 24.5, 24.18, 31.8

M Mabo v Queensland (No 2) (1992) 175 CLR 1 …. 2.21 McAlister v New South Wales (No 2) [2017] FCA 93 …. 1.49, 25.5, 25.29 McBride v Monzie Pty Ltd (2007) 164 FCR 559 …. 4.19, 15.5 McCulloch v Maryland 17 US 316 (1819) …. 32.8, 32.9 McHenry v Lewis (1882) 22 Ch D 397 …. 1.50 McIlwain v Ramsey Food Packaging Pty Ltd (No 3) [2006] FCA 994 …. 28.5

McIntyre v Eastern Prosperity Investments Pty Ltd (No 4) [2002] FCA 1133 …. 16.1, 16.8 McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 …. 1.55, 32.10, 32.16, 32.62 McLean v Nicholson (2002) 172 FLR 90; [2002] VSC 446 …. 16.5, 16.11 McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1; ATPR (Digest) 46-174 …. 17.2, 17.6, 17.17, 17.20 — v — [1997] FCA 1298 …. 17.6, 17.17 — v — [1997] FCA 1426 …. 17.22 — v — (1998) 84 FCR 1; 156 ALR 257; [1998] FCA 658 …. 1.67, 10.17, 17.6, 17.17, 25.34, 26.16, 31.1, 31.14, 32.1, 32.2, 32.5, 32.8, 32.10, 32.66, 32.68 — v — (No 6) (FCA, Wilcox J, 27 November 1997, unreported) …. 26.15, 26.18, 35.1 Madgwick v Kelly (2013) 212 FCR 1; 299 ALR 188; [2013] FCAFC 61 …. 1.38, 33.1, 33.4, 33.5, 33.7, 33.19, 33.24, 33.26, 33.27 Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304 …. 13.7 Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021 …. 20.7 Martens v Thomann, 273 F 3d 159 (2nd Cir, 2001) …. 2.21 Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 …. 7.8, 22.4, 22.5, 22.15, 22.36, 22.37, 22.67, 32.21, 32.24 — v — (Ruling No 40) [2015] VSC 131 …. 32.10 — v SPI Electricity Pty Ltd (Supreme Court of Victoria, No. 4788 of 2009) …. 9.27 — v — (No 9) [2013] VSC 671 …. 33.7, 33.27 — v — (No 10) [2012] VSC 379 …. 1.64 — v — (No 12) [2012] VSC 549 …. 6.9 — v — (No 13) (2013) 39 VR 255; [2013] VSC 17 …. 1.27, 1.68, 9.12, 11.12, 22.27, 25.20, 32.42, 32.44, 32.46, 32.49, 32.50, 36.1, 36.4, 36.5, 36.7, 36.8 — v — (No 16) [2013] VSC 74 …. 11.12 — v — (No 32) [2013] VSC 630 …. 1.65

— v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (No 5) (2012) 35 VR 615 …. 1.72, 17.5, 17.7, 17.13, 17.20, 17.21, 32.70, 33.11 Meaden v Bell Potter Securities Ltd (No 2) (2012) 291 ALR 482; [2012] FCA 418 …. 1.44, 15.12, 15.16, 15.17, 15.22, 15.27, 15.34, 16.2, 18.2 — v — (No 3) [2012] FCA 739 …. 1.44, 15.27, 15.34 — v — (No 6) (2013) 233 FCR 81; [2013] FCA 1176 …. 15.27, 15.34, 15.35, 15.36, 16.2 Melbourne City Investments v Myer [2017] VSCA 187 …. 1.88, 1.89 Melbourne City Investments Pty Ltd v Leighton Holdings Ltd [2015] VSCA 235 …. 1.89 — v Treasury Wine Estates Ltd [2016] FCA 787 …. 1.89 — v — [2017] FCAFC 98 …. 1.48, 1.68, 1.76, 1.80, 2.3, 10.18, 24.1, 24.2, 29.4, 29.8, 32.9, 32.19, 32.29, 32.43, 32.47, 32.50, 32.72 Melville v Craig Nowlan & Associates Pty Ltd (2002) 54 NSWLR 82 …. 33.23 Mercedes Holdings Pty Ltd v Waters (No 1) (2010) 77 ACSR 265; [2010] FCA 124 …. 22.3, 22.29 Mercieca v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Eagle Travel Tower Services Pty Ltd [2012] VSC 204 …. 6.2, 36.6 Merck Sharpe & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26 …. 4.24, 9.20, 15.22, 28.7, 28.13, 28.29, 32.12 Milfull v Terranora Lakes Country Club Ltd (1998) ATPR 41-642 …. 15.12, 15.23 — v — [2002] FCA 178 …. 17.2 Milner v Delita Pty Ltd [1985] 9 FCR 299 …. 17.12 Minister for Works (WA) v Civil and Civic Pty Ltd (1967) 116 CLR 273 …. 28.5 Mitic v OZ Minerals Ltd (No 2) [2017] FCA 409 …. 22.35, 26.15 Mitsub Pty Ltd v McGraw Hill Financial Inc [2016] FCA 1285 …. 32.17 Mitty’s Authorised Newsagency v Registrar of Trade Marks (1983) 78 FLR 217 …. 34.10

Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; 76 ALJR 926; [2002] HCA 27 …. 1.17, 2.11, 2.12, 2.28, 2.29, 3.6, 7.1, 7.11, 19.2, 20.4, 26.7, 28.2, 28.12, 28.20, 32.59 Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 …. 22.13, 22.15, 22.21, 22.22, 22.34, 22.37, 22.53, 32.20, 32.36, 35.6, 35.26 — v — (No 2) [2013] FCA 1163 …. 22.21, 22.22, 32.20 — v — (No 3) [2014] FCA 680 …. 32.20, 32.26 Moller v Roy (1975) 132 CLR 622 …. 28.5 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; 338 ALR 188; [2016] FCAFC 148 …. 1.59, 6.1, 6.10, 10.8, 32.8, 32.10, 32.31, 32.32, 32.37, 32.71, 35.13, 35.15 Moore v Scenic Tours Pty Ltd [2015] NSWSC 1777 …. 17.8 — v Inglis (1976) 50 ALJR 589; 9 ALR 509; on appeal (1976) 136 CLR 677; 51 ALJR 207 …. 12.7 Morgan, Re Brighton Hall Securities Pty Ltd (in liq) [2013] FCA 970 …. 2.18, 2.32, 4.8 Morony v Reschke [2012] NSWSC 1218 …. 2.36 Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; 244 ALR 600; [2007] FCAFC 200 …. 1.41, 1.92, 4.31, 6.1, 9.9, 9.10, 9.11, 9.12, 9.24, 15.2, 15.4, 15.6, 15.8, 15.10, 15.13, 15.14, 15.17, 15.25, 15.30, 15.36, 16.4, 31.10 Murphy v Overton Investments Pty Ltd [1999] FCA 1123 …. 4.25, 9.13 — v — [1999] FCA 1673 …. 4.25 Muswellbrook Shire Council v Royal Bank of Scotland NV [2013] FCA 616 …. 32.10 — v — (9 June 2016) [2016] FCA 819 …. 1.67, 6.1, 6.4, 6.11 — v — [2017] FCA 414 …. 10.7, 32.54

N Najdovska v Australian Iron and Steel Pty Ltd (1986) EOC 92-176 …. 17.12

Naken v General Motors of Canada Ltd (1983) 144 DLR 385 …. 28.25 National Australia Bank Ltd v Pathway Investments Pty Ltd (2012) 265 FLR 247; [2012] VSCA 168 …. 1.34, 6.2, 32.59 National Mutual Life Association of Australasia Ltd v Reynolds [2000] FCA 267 …. 3.8 News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 …. 20.8, 20.18 Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194 …. 22.14, 22.15, 22.37, 26.2, 32.26, 32.27, 32.44 Nixon v Philip Morris (Australia) Ltd (1999) 95 FCR 453; 165 ALR 515; [1999] FCA 1107 …. 13.4, 26.13, 26.22

O Oasis Fund Management Ltd v Royal Bank of Scotland NV [2010] NSWSC 584 …. 20.14, 23.12 Oldham v Law Institute of Victoria Ltd (Legal Practice) [2012] VCAT 571 …. 6.2 Oliver v Commonwealth Bank of Australia (No 2) (2012) 205 FCR 540; [2012] FCA 755 …. 12.7, 19.1, 19.7 Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Co Inc (1994) 181 CLR 404 …. 2.38, 32.6, 32.8 Oztech Pty Ltd v Public Trustee of Queensland [2015] FCA 1010 …. 10.4, 10.16, 24.3, 25.9

P P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176 …. 17.22, 32.10, 32.59, 32.60 — v — (No 4) [2010] FCA 1029 …. 22.2, 22.12, 22.18, 22.37, 22.55, 32.10, 32.36 — v Multiplex Ltd (2007) 242 ALR 111; [2007] FCA 1061 …. 6.3, 9.24, 11.17, 15.16 — v — [2007] FCA 1044 …. 16.4 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 333 ALR

569; 90 ALJR 835; [2016] HCA 28 …. 1.57 Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 3) [2009] FCA 138 …. 4.36 — v — (No 5) [2009] FCA 1053 …. 32.52 — v — (No 6) [2010] FCA 295 …. 15.33, 18.2 — v — (No 11) [2013] FCA 241 …. 17.3 — v — (No 13) [2013] FCA 859 …. 21.2 — v — [2008] FCA 1606 …. 4.19 Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3) [2012] VSC 625 …. 22.12, 32.36, 35.26 Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2001] FCA 1073 …. 4.18 Paxtours International Travel Pty Ltd v Singapore Airlines Ltd [2012] FCA 426 …. 6.9, 10.11, 32.10, 32.55 Perry v Powercor [2012] VSC 113 …. 1.67 Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd [2017] FCA 699 …. 33.6 Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (2010) 184 FCR 1; 266 ALR 1; [2010] FCA 180 …. 9.27, 28.7 — v — (No 3) [2009] FCA 5 …. 15.12, 15.22, 15.24, 32.12 — v — (No 6) [2013] FCA 447 …. 18.2, 22.11, 22.13, 22.16, 22.36, 22.58 Petrusevski v Bulldogs Rugby League Club Ltd [2003] FCA 1056 …. 2.8, 18.8 — v Bulldogs Rugby League Ltd [2003] FCA 61 …. 1.25, 9.4, 9.6, 9.13, 9.22 Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 3) (2010) 267 ALR 494 …. 11.1, 11.15 — v — (No 4) [2010] FCA 749 …. 6.4, 10.4, 10.14, 25.3, 25.5, 25.10, 25.36 — v — (No 6) [2011] FCA 277 …. 1.75, 22.13, 22.37, 24.12, 24.19, 32.10, 32.30, 32.47 Philip Morris v Brown (1981) 148 CLR 457; 33 ALR 465 …. 8.1 Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; ATPR 41-759;

[2000] FCA 229 …. 1.18, 1.24, 1.92, 1.93, 4.15, 4.17, 4.18, 4.19, 4.21, 4.22, 4.41, 4.44, 4.45, 4.49, 6.1, 16.10, 8.3, 9.13, 9.14, 13.3, 26.14, 33.18 Poignand v NZI Securities Australia Ltd (1992) 37 FCR 363; 109 ALR 213 …. 3.9 Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281 …. 18.9 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; 36 ALR 3; [1981] HCA 45 …. 2.33, 17.22, 28.10, 28.25 Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229; [1979] 3 All ER 507; [1980] 2 WLR 339 …. 20.7, 28.25

Q Qantas Airways Ltd v Cameron (No 3) (1996) 68 FCR 387; 148 ALR 378 …. 32.58

R R v GIO Australia Holdings Ltd [2001] FCA 1487 …. 11.5 — v Ireland (1970) 126 CLR 321 …. 28.5 Redfern v Mineral Engineers Pty Ltd [1987] VR 518 …. 32.20 Regent Holdings Pty Ltd v Victoria (2012) 36 VR 424; [2012] VSCA 221 …. 1.48, 32.59 Revian v Dasford Holdings [2001] FCA 777 …. 11.15 — v Dasford Holdings Pty Ltd [2002] FCA 1119 …. 5.18, 20.3, 20.15, 20.16, 20.21 Richards v Macquarie Bank Ltd [2011] FCA 1085 …. 4.38 — v — (No 4) [2013] FCA 438 …. 22.12, 22.13 Rod Investments (Vic) Pty Ltd v Clark [2006] VSC 342 …. 4.25 — v — (No 3) [2007] VSC 306 …. 11.7, 11.9, 11.22, 12.2 Rodriquez & Sons Pty Ltd v Queensland Bulk Water Supply Authority [2015] NSWSC 1771 …. 17.10 — v — (No 5) [2015] NSWSC 1771 …. 1.70 Rosenfield Nominees Pty Ltd v Bain and Co (1988) 14 ACLR 467 …. 33.28

Rowe v Ausnet Electricity Services Pty Ltd (formerly SPI Electricity Pty Ltd) (Ruling No 6) [2016] VSC 166 …. 32.10, 32.70 — v — (S CI 2012 04538) …. 17.21 Royall v Croydon Hospital Pty Ltd [2013] VSC 453 …. 12.7 Ryan v Great Lakes Council (1997) 78 FCR 309; 149 ALR 45; [1997] FCA 970 …. 4.41, 5.1, 5.5, 5.9, 5.20, 17.15, 32.61 — v — (1998) 155 ALR 447 …. 33.3, 33.19

S Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14 …. 2.16, 2.32, 16.6, 26.7, 28.2, 31.5, 31.15, 34.1 Schanka v Employment National (Administration) Pty Ltd (1998) 86 IR 283 …. 15.22 — v — [1999] FCA 1812 …. 24.8 — v — (2001) 114 FCR 379; 110 IR 97; [2001] FCA 1623 …. 24.14, 28.11, 28.17 Schutt Flying Academy (Australia) Pty Ltd v Mobil OilAustralia Ltd (2000) 1 VR 545; [2000] VSCA 103 …. 26.6, 26.7, 26.14, 26.21 Scott v Oz Minerals Ltd [2013] FCA 182 …. 32.10 Sherwood v Commonwealth Bank of Australia (No 5) [2015] FCA 688 …. 11.9, 11.22 Silkfield Pty Ltd v Wong (1998) 90 FCR 152 …. 15.2 — v — [1998] FCA 1645 …. 13.7, 14.8, 31.9, 31.19 Skyring v Commissioner of Taxation (2007) 244 ALR 505; [2007] FCA 1526 …. 30.7 Smith v Australian Executor Trustees Ltd; Creighton v Australian Executor Trustees Ltd [2016] NSWSC 17 …. 1.54, 15.5, 32.15 — v Swormstedt 57 US 288 (1850) …. 20.6 — v University of Ballarat (2006) 229 ALR 343; [2006] FCA 148 …. 4.13, 5.2 Sprague v Ticonic National Bank, 307 US 161 (1939) …. 35.10 Sreika v Cardinal Financial Securities Ltd [2000] FCA 1647 …. 2.27, 2.35,

2.36, 2.39 Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 …. 1.69, 9.27, 22.4, 22.37, 32.22, 32.54 — v — (No 7) [2017] FCA 748 …. 27.6, 32.22 Stephens-Sidebottom v Victoria (Department of Education and Early Childhood Development) [2011] FCA 893 …. 7.8 Stoyef v Masu Financial Management Pty Ltd (No 2) [2008] FCA 1849 …. 13.2, 13.3, 13.10 Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230 …. 11.3, 11.19, 31.10, 31.17 Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164; 149 ALR 261 …. 4.4, 4.16, 4.44, 5.3, 5.5, 5.7, 5.19, 13.4

T Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457 …. 22.2, 22.3 Taylor v Telstra Corporation Ltd [2007] FCA 2008 …. 1.75, 22.13, 22.21, 22.37, 22.52, 22.59, 22.66, 32.54 Taylor’s Application, Re [1972] 2 QB 369 …. 20.1 Templeton v Leviathan Pty Ltd (1921) 30 CLR 34; 28 ALR 95 …. 20.14 The Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd [1997] FCA 607 …. 3.2, 3.5 Thomas v Mowbray (2007) 233 CLR 307; [2007] HCA 33 …. 32.8 — v Powercor [2011] VSC 614 …. 1.67, 35.6, 36.6 — v Powercor Australia Ltd (Ruling No 1) [2010] VSC 489 …. 17.22, 32.59 Tian v Minister for Immigration, Local Government and Ethnic Affairs (1994) 33 ALD 451 …. 31.9 Timbercorp Finance Pty Ltd (in liq) v Collins [2016] VSCA 128 …. 1.72, 16.7, 17.2, 17.22, 18.3, 18.4 — v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11; 91 ALJR 37; [2016] HCA 44 …. 1.11, 1.17, 1.21, 1.30, 1.41, 1.83,

2.8, 2.19, 2.20, 2.33, 4.29, 4.52, 9.1, 9.19, 9.27, 12.7, 12.8, 17.2, 18.4, 20.12, 20.13, 20.19, 22.33, 28.10, 28.13, 28.16 — v Collins and Tomes [2015] VSC 461 …. 2.23, 29.4 TMAC Pty Ltd (t/as Northstar Property Services) v Thomas Ford Training Pty Ltd (t/as Fresh Telecoms) [2010] FCA 445 …. 4.26, 15.5, 15.32 Tobacco Control Coalition Inc v Philip Morris (Aust) Ltd [2000] FCA 1004 …. 33.3 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 …. 2.23, 28.10, 28.16 Tongue v Council of the City of Tamworth (2004) 141 FCR 233; [2004] FCA 1702 …. 20.4, 20.16, 20.21, 22.6, 23.1, 23.2, 23.3, 23.4, 23.5, 23.6, 23.7, 23.8, 23.9, 23.11, 31.9 — v — [2004] FCA 209 …. 22.30 — v — [2005] FCA 124 …. 15.5, 16.1, 23.7 Transport Accident Commission v Coyle (2001) 3 VR 589 …. 22.6 Treasury Wine Estates Ltd v Melbourne City Investments Pty Ltd (2014) 45 VR 585 …. 1.89 Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457; 118 ALR 510 …. 4.3, 4.4, 4.46, 6.1, 13.7, 15.23, 15.29, 20.5, 20.20 Trustees v Greenough, 105 US 527 (1882) …. 35.10, 35.11 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591; 169 ALR 616; [2000] HCA 11 …. 5.2

V Vasram v AMP Life Ltd [2000] FCA 1676 …. 15.17, 15.29, 17.3 — v — [2000] FCA 1916 …. 15.12, 17.3 Vernon v Village Life Ltd [2009] FCA 516 …. 6.4, 10.2, 10.4, 10.15, 22.1, 24.4, 25.18, 32.10, 32.51 Virk Pty Ltd v Yum! Restaurants Australia Pty Ltd [2016] FCA 1468 …. 29.4

Vlachos v Centro Properties Ltd (Federal Court of Australia, Proceeding No VID 366 of 2008, Middleton J) …. 22.29

W Wakim, Re; Ex parte McNally (1997) 189 CLR 520; [1997] HCA 25 …. 8.2 Wakim, Re; Ex parte McNally (1999) 163 ALR 270; [1999] HCA 27 …. 8.2, 8.3, 8.4 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 …. 3.4 Watson v AWB Ltd [2009] FCA 215 …. 4.50, 9.12 — v — [2007] FCA 1367 …. 2.27, 2.36, 2.39 Weldon v Neal (1887) 19 QBD 394 …. 11.3, 11.19, 31.17 Whirlpool (Aust) Pty Ltd v Discount Electrical Centre (Aust) Pty Ltd [1999] FCA 912 …. 11.13 Williams v FAI Home Security Pty Ltd [1999] FCA 1771 …. 9.14 — v — (No 2) [2000] FCA 726 …. 9.13 — v — (No 3) [2000] FCA 1438 …. 24.13, 25.4 — v — (No 4) (2000) 180 ALR 459; [2000] FCA 1925 …. 1.75, 2.22, 2.40, 22.1, 22.13, 22.15, 22.60, 22.61, 23.1 — v — (No 5) [2001] FCA 399 …. 22.21, 22.37, 31.8, 32.40, 32.42 Wilson v South Australia [2017] FCA 219 …. 2.3, 2.41, 20.1, 20.8, 20.10, 20.18 — v — (No 2) [2016] FCA 812 …. 2.3, 2.41, 20.18 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (No 3) [2010] FCA 747 …. 2.27, 2.36, 2.38 — v Lehman Brothers Australia Ltd (in liq) (2012) 301 ALR 1 …. 17.2, 17.19 — v — (No 8) [2013] FCA 411 …. 35.3, 35.21 Winterford v Pfizer Australia Pty Ltd [2012] FCA 1199 …. 10.17, 32.48 Winton, Re; Ex parte Jolliffe (1987) 17 FCR 89 …. 6.5, 6.13 Wong v Silkfield Pty Ltd (1999) 199 CLR 255; 165 ALR 373; [1999] HCA 48 …. 1.11, 11.17, 1.19, 1.25, 4.15, 4.30, 4.32, 4.48, 4.52, 9.4, 15.2, 15.16, 15.17, 15.35, 20.9, 28.11

Woodcroft-Brown v Timbercorp Securities Ltd (in liq) (2011) 253 FLR 240 …. 9.19, 17.21, 32.70 — v — (No 2) [2011] VSC 526 …. 37.2 Woodhouse v McPhee (1997) 80 FCR 529 …. 33.2, 33.3, 33.7, 33.21, 33.22, 33.27 Woolf v Snipe (1933) 48 CLR 677 …. 22.20 Wotton v Queensland (2009) 109 ALD 534; [2009] FCA 758 …. 28.9, 32.6 — v — (No 7) [2017] FCA 406 …. 1.67, 25.20 — v — (No 8) [2017] FCA 639 …. 9.27 Wright Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85 …. 6.8, 9.6 — v — (No 3) [2011] FCA 1172 …. 22.37, 22.66

Z Zhang De Yong v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384; 118 ALR 165; [1993] FCA 489 …. 1.19, 4.20, 4.22, 4.39, 4.45, 5.21, 6.1, 15.12, 15.14, 15.15, 15.22, 15.29, 17.3, 28.12, 28.18, 28.24

Comparative Table of Provisions Provision

Interpretation Application Commencement of proceedings Standing Consent to be a group member Persons under disability Representative proceedings not to be commenced in certain circumstances Pleading requirements and commencement of proceeding Right of group member to opt out Altering the group description Court powers concerning group membership Fewer than seven group members Cost of distributing money excessive Proceedings not continue as representative proceedings Consequences of proceedings not continuing

Commonwealth

Victoria

Queensland

(Supreme Court Act 1986 (Vic)) 33A 33B 33C

New South Wales (Civil Procedure Act 2005 (NSW)) 155 156 157

(Federal Court of Australia Act 1976 (Cth)) 33A 33B 33C 33D 33E

33D 33E

158 159

103C 103D

33F 33G

33F 33G

160

103E

33H

33H

161

103F

33J

33J

162

103G

33K

33K

163

103H

–

33KA

–

–

33L

33L

164

103I

33M

33M

165

103J

33N

33N

166

103K

33P

33P

167

103L

(Civil Proceedings Act 2011 (Qld)) 103A 111 103B

under this Part Not all issues common Individual issues Directions relating to commencement of further proceedings Adequacy of representation Stay of execution Settlement and discontinuance of a representative proceeding Settlement of individual claim of representative party Notice of certain matters Notices Judgment — powers of the court Constitution etc of fund Effect of judgment Appeals to the court Appeals to the High Court Suspension of limitation periods General power of court to make orders Saving of rights, powers etc Group member costs Order may specify a date by which group members must take a step Special provision relating to claims under Pt VI of the Competition and Consumer Act 2010 Order in event of decision or admission on liability Reimbursement of a representative party’s costs Transitional provisions

33Q 33R 33S

33Q 33R 33S

168 169 170

103M 103N 103O

33T 33U 33V

33T 33U 33V

171 172 173

103P 103Q 103R

33W

33W

174

103S

33X 33Y 33Z

33X 33Y 33Z

175 176 177

103T 103U 103V

33ZA 33ZB 33ZC 33ZD 33ZE

33ZA 33ZB 33ZC – 33ZE

178 179 180 – 182

103W 103X 103Y – 103Z

33ZF

33ZF

183

103ZA

33ZG 43(1A) –

– 33ZD 33ZG

– 181 –

– 103ZB –

–

33ZH

–

–

33ZJ

33ZJ

184

103ZC

–

33ZK

–

–

33ZH

Contents Foreword Publisher’s Note Preface Acknowledgments Table of Cases Comparative Table of Provisions

Chapter 1

Introduction

What is a Class Action? The Legislation The Purpose of Class Actions Advantages and Disadvantages of Class Actions Class Actions Practice and Procedure Representative Party Pleading Substantive Law Group Definition Funding the Class Action Case Management of Class Actions Responding to a Class Action Security for Costs The Right to Opt Out Discontinuing a Class Action Alternative Dispute Resolution Multiple class actions

Separate Questions and Stated Case Discovery Expert Evidence Concluding Class Actions — Class Closure Trial Remaining Issues, Sub-groups and Individual Issues Settlement Settlement Distribution Notices Judgment Limitation Periods General Power Costs Appeals Entrepreneurial class actions Main Differences Between Class Actions Regimes

Chapter 2

Interpretation: s 33A

Overview Legislation Commentary Representative Proceeding Representative Party Group Member Relationship Between Representative Party and Group Members Sub-group and Sub-group Representative Party Adequacy of Representation Costs Commenced Case Law

Chapter 3

Application: s 33B

Overview Legislation Commentary A Cause of Action Arising Case Law

Chapter 4

Commencement of Proceedings: s 33C

Overview Legislation Commentary Threshold Requirements Seven or More Persons Claims Against the Same Person Same, Similar or Related Circumstances Substantial Common Issue of Law or Fact Some or All of Them Proceedings Commenced Equitable Relief Damages Individual Assessment Same or Different Relief Separate Claims Case Law

Chapter 5

Standing: s 33D

Overview Legislation Commentary Overcoming the Common Law on Standing

Standing Conferred and Limited Section 33D and multiple respondents ‘Against the Same Person’ Controversy Sufficient Interest and Public Interests Adequacy of Representation Ceasing to have a Claim but Continuing the Proceeding Case Law

Chapter 6

Consent to be a Group Member: s 33E

Overview Legislation Commentary Consent Not Required Consent Provided Opt-out Procedure and Consent Officer of the Commonwealth Body Corporate Consent and Representative Parties Judges Timing of Consent Case Law

Chapter 7

Persons Under Disability: s 33F

Overview Legislation Commentary Purpose of Provision Disability and Incapacity Steps Requiring a Litigation Representative Person Under a Disability and Settlement Case Law

Chapter 8

Representative Proceedings Not to be Commenced in Certain Circumstances: s 33G

Overview Legislation Commentary Case Law

Chapter 9

Pleading Requirements and Commencement of Proceeding: s 33H

Overview Legislation Commentary Group Description or Identification Open or Closed Class Claim and Relief Specification Generality of Pleading Commencement of Proceedings and Shape of Trial Common Questions Specification Case Law Sample Group Definitions

Chapter 10 Right of Group Member to Opt Out: s 33J Overview Legislation Commentary Purpose of Provision Practice Notice guidance Timing of opt-out notice — date to be fixed by the court Form of the Notice Sample opt-out notice Class closure and opt-out notices

Litigation funding, common fund, and opt-out notices Extension of Time to Opt Out of a Proceeding Reinstatement into a Representative Proceeding Statute of Limitations Case Law

Chapter 11 Altering the Group Description: s 33K Overview Legislation Commentary Statutory Construction of s 33K Date from which amendment takes effect Matters for Consideration in Exercise of Discretion Group member amendment and class closure for the purposes of settlement Rule in Eshelby’s Case Interaction with Other Powers of Amendment Applications by Respondents/Defendants Case Law

Chapter 12 Court Powers Concerning Group Membership: s 33KA (Vic Only) Overview Legislation Commentary Statutory Construction ‘Just or Expedient’ Interaction Between s 33KA and s 33K Case Law

Chapter 13 Fewer Than Seven Group Members: s 33L

Overview Legislation Commentary The Court ‘May’ Fewer Than Seven Demonstrating or Rebutting the Existence of Fewer Than Seven Group Members Factors Relevant to Discretion Effect of Order — Continue/No Longer Continue Case Law

Chapter 14 Cost of Distributing Money Excessive: s 33M Overview Legislation Commentary Purpose of s 33M Onus Cost of Distributing Damages Excessive Effect of Order — Continue/No Longer Continue Cy-près Alternative Orders Case Law

Chapter 15 Proceedings not Continue as Representative Proceedings: s 33N Overview Legislation Commentary Nature of the Provision Purpose of the Provision The Interests of Justice

Costs and Separate Proceedings All the Relief Sought can be Obtained by Means of a Proceeding Other Than a Representative Proceeding Representative Proceeding Will Not Provide an Efficient and Effective Means of Dealing with the Claims of Group Members Otherwise Inappropriate Discretion Relationship with s 33C Section 33N and Case Management Individual Circumstances and Common Issues Timing of Application Additional New South Wales and Queensland Provisions Reinstatement of a Representative Proceeding Case Law

Chapter 16 Consequences of Proceedings Not Continuing Under This Part: s 33P Overview Legislation Commentary Operation of s 33P Group Members Being Joined and Costs Group Members not Joined and Statutes of Limitations Case Law

Chapter 17 Not All Issues Common: s 33Q Overview Legislation Commentary Case Management Approaches Sample group members — an alternative case management approach

Sub-groups Sub-groups and Costs Valid Representative/Group Proceeding Required Application of s 33N to a Sub-group Case Law

Chapter 18 Individual Issues: s 33R Overview Legislation Commentary Individual Issues Individual Issues and Costs Notice of Liability for Costs Under s 33R Offers of Compromise and Calderbank Letters Case Law

Chapter 19 Directions Relating to Commencement of Further Proceedings: s 33S Overview Legislation Commentary Alternative to ss 33Q and 33R Proceedings, Group Proceeding and Representative Proceeding Alternative to s 33P Case Law

Chapter 20 Adequacy of Representation: s 33T Overview Legislation Commentary ‘Not Able Adequately to Represent the Interests of the Group Members’

Effect of order under s 33T Safeguard for Group Members ‘On an Application by a Group Member/Sub-Group Member’ Costs of Proceeding Where Change of Representative Party New South Wales and Queensland — Inadequacy and Discontinuance Case Law

Chapter 21 Stay of Execution: s 33U Overview Legislation Commentary Cross Claims

Chapter 22 Settlement and Discontinuance of a Representative Proceeding: s 33V Overview Legislation Commentary Purpose of Provision Settlement and Individual Claims Application for Approval Notice Role of the Lawyer ‘Fair and Reasonable’ Group Member Objections Court-appointed Contradictors Approval of Legal Fees Payments to Representative Parties Payments to Litigation Funders Payment to Funding Group Members Settlement Approval Hearing

Class Closure Discontinuance Releases Section 33V(2) — Distribution of Money Settlement Distribution Schemes Sample Settlement Approvals Case Law

Chapter 23 Settlement of Individual Claim of Representative Party: s 33W Overview Legislation Commentary Purpose of Provision Application for Leave to Settle Representative Party’s Individual Claim Application for Leave to Withdraw as a Representative Party Notice Given to Group Members of Representative Party’s Application Substitution of Representative Party Conditional Application for Substitution Settlement and Standing to Continue the Proceeding Case Law

Chapter 24 Notice of Certain Matters: s 33X Overview Legislation Commentary Purpose of ss 33X and 33Y Purpose of Opt-out Notice Effect of Amendment of Statement of Claim on Opt-out Notice Notice in Closed Class Proceedings Section 33X(1)(b) — Want of Prosecution

Section 33X(1)(c) — Application for Leave to Withdraw as Representative Party Section 33X(2) — Dispensing with Notice Requirements Section 33X(4) — Approval of Settlement Notice Section 33X(5) — Any Other Matter Case Law

Chapter 25 Notices: s 33Y Overview Legislation Commentary Section 33Y(2) — Court Must Approve Form and Content of Notice Practice Notice guidance Timing of Notice Costs Section 33Y(3) — Specifications by the Court Costs of publishing the notice Section 33Y(4) — Notice May be Given by Means of a Press Advertisement, Radio or Television Broadcast, or Any Other Means Section 33Y(5) — Personal Notice Only Allowed if Reasonably Practicable and not Unduly Expensive Section 33Y(6) and (7) — Prescription of Contents of Certain Notices Section 33Y(8) — Failure of a Group Member to Receive or Respond to Notice does not Affect an Order or Judgment Case Law

Chapter 26 Judgment — Powers of the Court: s 33Z Overview Legislation Commentary Lump Sum or Aggregate Damages Cy-près Rule

Availability of Exemplary Damages Such orders as the Court thinks just Closing the Class Separate Questions Case Law

Chapter 27 Constitution of Fund: s 33ZA Overview Legislation Commentary

Chapter 28 Effect of Judgment: s 33ZB Overview Legislation Commentary Judgment Must Describe or Otherwise Identify the Group Members Judgment in a Representative Proceeding Res Judicata and Anshun Estoppel Non-compliance Case Law

Chapter 29 Appeals to the Court: s 33ZC Overview Legislation Commentary Appeals are Representative Proceedings Parties to an Appeal Group Members Can Appeal Notice No Opt Out

Group Definition Case Law

Chapter 30 Appeals to the High Court: s 33ZD Overview Legislation Commentary High Court Appeals are Representative Proceedings Parties to an Appeal Group Members Can Appeal Notice No Opt Out Group Definition Section 33 — Appeals to High Court

Chapter 31 Suspension of Limitation Periods: s 33ZE Overview Legislation Commentary Purpose of Provision Limitation Periods Suspended by s 33ZE Expired limitation periods not re-enlivened ‘Determination’ of a Group Member’s Claim Amendments to the Group Case Law

Chapter 32 General Power of Court to Make Orders: s 33ZF Overview Legislation Commentary

Purpose of the Provision Invoking the Provision A Broad Power Statutory Construction Use of General Power Common Issues Trial of Separate Questions Multiple Proceedings Settling Class Actions Legal Costs Litigation Funding Fees Litigation Funding, Equalisation Orders and the Common Fund Amending the Group Definition Closing the Class Timing of Class Closure Dispensing with the Opt-out Notice Dealings with Individual Group Members Execution of Settlement Agreement by Applicant on Behalf of All Group Members Reinstating a Group Member After Opt Out Security for Costs Regulating Costs Discovery from Group Members Other Than the Applicant Hybrid Proceedings (that is, Proceeding Brought in the Normal Course and a Class Action) Stay on Claims Case Law

Chapter 33 Group Member Costs (s 43(1A) (Cth), s 33ZD (Vic), s 181 (NSW), s 103ZB (Qld)); Saving of Rights, Powers etc (s 33ZG)

Overview Legislation Commentary Security for Costs Security for costs — factors to consider After The Event (ATE) Insurance No Security Against Group Members in Victoria Security for costs against group members in New South Wales (and Queensland?) Sample Group Members and Costs Proceedings of a Representative Character Other Jurisdictions Case Law

Chapter 34 Special Provision Relating to Claims Under Part VI of the Competition and Consumer Act 2010: s 33ZH Overview Legislation Commentary Section 33ZH(1) — Group Members are Parties to the Representative Proceeding Section 33ZH(2) — Application by Representative Party and All Group Members Case Law

Chapter 35 Reimbursement of a Representative Party’s Costs: s 33ZJ Overview Legislation Commentary

Purpose of Provision Interaction with Other Costs Provisions The ‘Free Rider’ Effect and Settlement Not a Basis for Indemnity Costs Section 33ZJ and the common fund concept Case Law

Chapter 36 Order May Specify a Date by which Group Members Must Take a Step: s 33ZG Supreme Court Act 1986 (Vic) Overview Legislation Commentary Extension of General Power in s 33ZF Relied Upon by the Court to Make Orders Regarding Class Closure Case Law

Chapter 37 Order in Event of Decision or Admission on Liability: s 33ZH Supreme Court Act 1986 (Vic) Overview Legislation Commentary Extension of General Power in ss 33ZF and 33ZG

Chapter 38 Transitional Provisions: s 33ZK Supreme Court Act 1986 (Vic) Overview Legislation Commentary

Chapter 39 Class Actions Practice Note (GPN-CA) — Federal Court of Australia

Class Actions Practice Note (GPN-CA) General Practice Note

Chapter 40 Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) — Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions)

Chapter 41 Practice Note SC GEN 17 — Supreme Court Representative Proceedings — Supreme Court of New South Wales Practice Note No. SC Gen 17 Supreme Court - Representative Proceedings

Chapter 42 Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings Practice Direction Number 2 of 2017 Supreme Court of Queensland Representative Proceedings

Chapter 43 Example opt-out notices Shareholder Class Action Opt Out Notice Federal Court of Australia Allco Finance Group Class Action Medical Device Class Action Federal Court of Australia Notice to Group Members ASR HIP Implants Class Action Notice Which Includes Registration Opt Out Notice Federal Court of Australia Litigation Funded Class Action Federal Court of Australia (Proceedings No Nsd1322/2012) Rembrandt 2 Noteholders’ Class Action Notice to Group Members Notice of Opt-Out Rights Notice Which Includes Class Closure

Registration and Opt Out Notice Federal Court of Australia Nab Bank Fees Class Action Overlapping Group Members Federal Court of Australia (Proceedings Nos.: Nsd 1344/2016; Nsd 414/2016; And Nsd 417/2016) Standard & Poor’s Class Actions Notice to Group Members Notice of Rights to:

Chapter 44 Example settlement notices Fairbridge Farm (NSW) Important Notice “Fairbridge Farm School” Class Action Notice of Proposed Settlement What is the Fairbridge Farm School class action? Who are the “group members”? Proposed settlement of the class action What group members must do Will group members be liable for legal costs under the settlement? What will happen in the coming weeks? Addresses for questions and forms Shareholder Class Action [Settlement Notice to Registered Group Members] Notice of Proposed Settlement Federal Court of Australia Allco Finance Group Class Action Schedule C [Settlement Notice to Unregistered Group Members] Notice of Proposed Settlement Federal Court of Australia Allco Finance Group Class Action Shareholder Class Action Newcrest Mining Class Action (Vid 406/2014) Notice of proposed Settlement Background Proposed Settlement Court Approval Process

Unregistered group members are bound by the settlement but receive no compensation Access to Settlement Documents What You Must Do Litigation Funding Important Features of the Proposed Scheme Further Information Notice of Objection to Proposed Settlement Newcrest Class Action No Vid 406 of 2014 A Details of Objector B Ground(S) of Objection C Attendance At Hearing At 10:15Am (Aest) On 14 April 2016 Medical Device Class Action Notice Of Proposed Settlement DePuy ASR Class Action in the Federal Court of Australia What Group Members Need to do Court Approval of the Proposed Settlement Contact Details Overview of the ASR Class Action and Proposed Settlement Who are Group Members? Proposed settlement of the ASR class action Is the settlement an admission by DePuy or JJM? Who is eligible to be compensated? How many Group Members are likely to make a claim? What is the process for making a claim and receiving compensation? How much will Group Members receive under the settlement? Do Group Members need to pay legal fees in order to make a claim? Other important features of the proposed settlement Bank Fees Registration to Receive Compensation Leighton Holdings: Opt Out And Settlement Notice

Leighton Shareholder Class Action Schedule A Information Regarding Group Member Registration Process Annexure E Federal Court Of Australia Notice To Group Members Annexure F Leighton Shareholder Class Action Notice Of Proposed Settlement And Opt-Out Rights To Funded Group Members Index

[page 1]

CHAPTER 1 Introduction 1.1 This chapter introduces the class action concept and the legislation which enables class actions to be brought in the Federal Court of Australia and the courts of Victoria, New South Wales and Queensland. The chapter provides an overview of the main legislative provisions, by reference to the Federal Court, which are discussed in detail in this book.

What is a Class Action? 1.2 Class actions (also known as group proceedings, collective actions or representative proceedings) can take many forms. As an introduction to the area, the following definition highlights the main features: … a legal procedure which enables the claims (or part of the claims) of a number of persons against the same defendant to be determined in the one suit. In a class action, one or more persons (‘representative plaintiff’) may sue on his or her own behalf and on behalf of a number of other persons (‘the class’ [or group]) who have a claim to a remedy for the same or a similar alleged wrong to that alleged by the representative plaintiff, and who have claims that share questions of law or fact in common with those of the representative plaintiff (‘common issues’). Only the representative plaintiff is a party to the action. The class members are not usually identified as individual parties but are merely described. The class members are bound by the outcome of the litigation on the common issues, whether favourable or adverse to the class, although they do not, for the most part, take any active part in that litigation. [See Rachel Mulheron, The Class Action in Common Law Legal Systems: A Comparative Perspective, Hart, 2004, 3.]

A more straightforward definition is that a class action is ‘a generic term for a procedure whereby the claims of many individuals against the same defendant can be brought or conducted by a single representative’: Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [1].

1.3 Central to the class action is its representative and aggregative character. The class action is a procedural device that aggregates the claims of numerous persons or entities and then allows a representative to litigate those claims on behalf of the group. For the aggregation and representation to be permitted there needs to be a certain level of cohesion to the claims so as to make it both fair and efficient to resolve those claims together. Consequently, the Australian legislation that creates the class action contains certain prerequisites that must be satisfied for a class action to be permitted. [page 2] The representative and aggregative characteristics or features of class actions also mean that there need to be protections or safeguards, especially for the group members who, although not before the court, are bound by the outcome of the class action. Consequently, the Australian class action regimes include requirements for group members to be able to exclude themselves (opt out), receive notice of certain events, require certain events to be subject to court approval and have a representative that can adequately represent their interests. While the above description provides the broad contours of a class action, it must be remembered that in Australia class actions are statutory creations which operate according to their enabling legislation. Careful attention to the legislation is central to understanding how a class action operates in a particular jurisdiction: Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; 229 ALR 58; [2006] HCA 41 at [40].

The Legislation 1.4 Class actions have existed in Australia since the enactment of the Federal Court of Australia Amendment Act 1991 (Cth), which provided for ‘representative proceedings’ through inserting Pt IVA into the Federal Court of Australia Act 1976 (Cth) (Federal Court Act). Part IVA commenced on

4 March 1992. The Federal Court class action was a response to the Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988). Part IVA subsequently became the model for class action procedures in other Australian jurisdictions. 1.5 In Victoria, a procedure for ‘group proceedings’ was inserted in Supreme Court Act 1986 (Vic) Pt 4A through the Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 (Vic) with effect from 1 January 2000. The Victorian and federal provisions are almost identical, including adopting the same numbering for most sections. 1.6 In New South Wales, Pt 10 was inserted into the Civil Procedure Act 2005 (NSW) through the Courts and Crimes Legislation Further Amendment Act 2010 (NSW) so as to make ‘representative proceedings’ modelled on, but not identical to, the federal provisions available in New South Wales courts. Part 10 commenced on 4 March 2011. 1.7 In Queensland, the Limitation of Actions (Institutional Child Sexual Abuse) and Other Legislation Amendment Act 2016 (Qld) inserted Pt 13A into the Civil Proceedings Act 2011 (Qld) so as to make ‘representative proceedings’ available. Part 13A commenced on 1 March 2017. 1.8 In October 2015, the Western Australia Law Reform Commission (Project 103 Representative Proceedings — Final Report) recommended that Western Australia introduce laws similar to those in Victoria and New South Wales to [page 3] allow for class actions to be brought in Western Australia. However, at the date of publication no bill to enact those laws had been introduced. 1.9 At the date of publication, no other Australian jurisdictions had adopted the detailed statutory model that exists in the Federal Court,

Victoria, New South Wales and Queensland. However, it is to be expected that other jurisdictions will follow suit in the future. In those other jurisdictions, representative actions based on the former practices of the Court of Chancery are available to run pseudo-class actions: see Supreme Court Rules 2000 (Tas) Pt 10 Div 5 rr 335–336; and Rules of the Supreme Court 1971 (WA) O 18 r 12. In South Australia, a hybrid model exists which includes the Court of Chancery model but also adopts other group litigation arrangements short of a detailed class action regime: Supreme Court Civil Rules 2006 (SA) Ch 5 Pt 1 Div 3 rr 80–84. The representative action also remains in the Federal Court, Victoria and Queensland court rules, but not New South Wales: see Federal Court Rules 2011 (Cth) r 9.21; Supreme Court (General Civil Procedure) Rules 2005 (Vic) O 8 r 2; Uniform Civil Procedure Rules 1999 (Qld) Ch 3 Div 4 rr 75– 77. The New South Wales representative action was contained in Uniform Civil Procedure Rules 2005 (NSW) rr 7.4 and 7.5 that were repealed by Courts and Crimes Legislation Further Amendment Act 2010 (NSW) Sch 6.4. However, representative actions, although no longer in the court rules, still exist in the equity jurisdiction in New South Wales: Burwood Council v Ralan Burwood Pty Ltd (No 2) [2014] NSWCA 179; Michael Legg and James Metzger, ‘Representative Proceedings in New South Wales’ in Miiko Kumar and Michael Legg, Ten Years of the Civil Procedure Act 2005 (NSW), Thomson Reuters, Sydney, (2015). Alternatives to class actions such as joinder or consolidation may also be available.

The Purpose of Class Actions 1.10

The ALRC stated in its report (at [13], [69]):

In the modern world the mass production and distribution of goods and services has become an inescapable reality. While it brings benefits to many, it also increases the possibility that wrongful injury, loss or damage will be caused on a mass scale. It is time for the legal system to face these realities and to free itself from the individual approach to the granting of legal remedies in cases where mass wrongs occur. An effective grouping procedure is needed as a way of reducing the cost of enforcing legal remedies in cases of multiple wrongdoing. Such a procedure could enable people who suffer loss or damage in common with others as a result of a wrongful act or omission by the same

respondent to enforce their legal rights in the courts in a cost effective manner. It could overcome the cost and other barriers which impede people from pursuing a legal remedy. People who may be ignorant of their rights or fearful of embarking on proceedings could be assisted to a remedy if one member of a group, all similarly affected,

[page 4] could commence proceedings on behalf of all members. The grouping of claims could also promote efficiency in the use of resources by enabling common issues to be dealt with together. Appropriate grouping procedures are an essential part of the legal system’s response to wrongdoing in an increasingly complex world.

1.11 The objective of class action litigation when introduced into the Federal Court was to provide access to justice, to resolve disputes more efficiently, to avoid respondents facing multiple suits and the risk of inconsistent findings, and to reduce costs for the parties and the courts: Second Reading Speech by the Attorney-General, Australia, Parliamentary Debates, House of Representatives, 14 November 1991, p 3176; Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [10]; Bright v Femcare Ltd (2002) 195 ALR 574; [2002] FCAFC 243 at [152]; Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 339 ALR 11; 91 ALJR 37; [2016] HCA 44 at [43]. In the Second Reading Speech for the Federal Court of Australia Amendment Act 1991 (Cth) the Minister identified the need for the procedure: The bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person’s loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action. The second purpose of the bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions. [Second Reading Speech by the Attorney-General, Australia, Parliamentary Debates, House of Representatives, 14 November 1991, pp 3174–5. See also Wong v Silkfield Pty Ltd (1999) 199 CLR 255; 165 ALR 373; [1999] HCA 48 at [20].]

1.12 More recently, the federal government has stated that it ‘supports class actions and litigation funders as they can provide access to justice for a large number of consumers who may otherwise have difficulties in resolving disputes’: Minister for Financial Services and Superannuation, Explanatory Statement, Select Legislative Instrument 2012 (No 172), 12 July 2012, 1. 1.13 As part of the second reading debate in the Senate, the Minister for Justice and Consumer Affairs observed that: The enhancement of the rights of many shareholders to take this sort of representative proceeding will be a great aid to the more formal regulators, such

[page 5] as the Australian Securities Commission, [now ASIC] in ensuring compliance with the corporations law. … this procedure will be of great assistance in ensuring that, in the area of the corporations law, not only the Australian Securities Commission but shareholders will be given an enhanced capacity to ensure that they can get those remedies which flow from contravention of the corporations law. (Second Reading Federal Court of Australia Amendment Bill 1991, Minister for Justice and Consumer Affairs, Australia, Parliamentary Debates, Senate, 13 November 1991, p 3023).

The Minister for Justice and Consumer Affairs, while also seeing the class action as facilitating access to remedies under the corporations legislation, points to the class action as encouraging compliance with corporate law requirements. The compliance rationale, while not part of the Second Reading Speech and not emphasised to the same degree as access to justice, suggests a further role or objective for the class action. The idea of a regulatory role has also been identified by the Federal Attorney-General’s Access to Justice Taskforce which has observed that ‘class actions may have a strong regulatory impact with the potential scale of the pecuniary damages providing a strong incentive to abide by existing laws’: Access to Justice Taskforce, Federal Attorney-General’s Department, A Strategic Framework for Access to Justice in the Federal Civil Justice System (September 2009), 114. The Australian Senate Economics References Committee in its report into the performance of the Australian Securities and Investments Commission (ASIC) also recognised that class actions provided access to the

courts and facilitated the deterrence of future securities laws violations: Senate Economics References Committee, Performance of the Australian Securities and Investments Commission (June 2014), 261.

Advantages and Disadvantages of Class Actions 1.14 In Giles v Commonwealth [2014] NSWSC 83, Garling J (at [81]–[82]) set out the advantages and disadvantages of class actions. The advantages include: they are a cost-effective means for enabling the pursuit of a legal remedy (or remedies) relating to wrongful acts or omissions by one or more defendants where there is commonality of conduct; they are a means of providing access to justice where there are a number of claimants for whom access to justice on an individual basis is not possible for a variety of reasons including impecuniosity and the small amount of damages being claimed; they provide an effective means for a court to resolve claims involving common questions of fact and law, where damages may be sufficient to justify the bringing of individual claims but the impact on court resources of the hearing of a multitude of claims would be more satisfactorily managed through a representative proceeding; the avoidance of injustice which may be occasioned to parties, which may arise from inconsistent judgments in individual cases relating to the same, or [page 6] substantially similar subject matter where these are heard separately and at different times; they achieve a balance between the ordinary rights of claimants and

defendants to pursue and defend cases individually, and the interests of a group of parties to litigate the action as a whole in an effective manner; they provide a means whereby defendants can limit their liability in a timely and cost-effective way, by enabling finalisation of claims from all group members including those who are not specifically identified other than as within the description of the group. By use of an opt-out procedure, the liability of a defendant can be determined on a final basis for all group members, although the members of the group are not specifically identified; they promote efficiency in the administration of justice, and in particular, provide for the sensible and careful use of judicial resources; and by combining individual claimants together, problems arising from inequality in bargaining power and any significant discrepancy between the resources of the parties, can be effectively minimised. However, representative actions also have disadvantages. These include: the number of, and the identities of, group members and the amount of damages of their claims may not be known, or else may be difficult to ascertain — at least during the early stage of the proceedings, including at the time of hearing of common questions of fact and law; there can be a difficulty for defendants in settling proceedings, or else rationally estimating their value, at an early stage because of these unknowns; apart from the named plaintiffs, members of the group lose any real degree of control over the manner and conduct of the proceedings, and have a role in the proceedings which is much diminished in its influence and relevance; and particularly in claims involving personal injury, a representative action is rarely, if ever, capable of resolving the calculation of individual damages.

Class Actions Practice and Procedure Commencing class actions

1.15 The decision to commence a class action requires consideration of a number of interrelated elements. They may be summarised as the class action legislation requirements, other procedural requirements, the substantive law requirements and the funding requirements. The main class action legislation requirements are those contained in ss 33C, 33D and 33H. See Chapters 4, 5 and 9. 1.16 The requirements to commence a class action in the Federal Court are set out in s 33C(1), which provides that where: (a) 7 or more persons have claims against the same person; and

[page 7] (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all those persons give rise to a substantial common issue of law or fact; a proceeding may be commenced by one or more of those persons as representing some or all of them.

1.17 The proceeding may be commenced whether or not the relief sought includes claims for damages that require individual assessment and whether or not the relief sought is the same for each person represented: s 33C(2)(a) (iii), (iv). Similarly, the proceeding may be commenced whether or not it is concerned with separate contracts or transactions between the individual group members and the respondents, or involves separate acts or omissions of the respondents done or omitted to be done in relation to individual group members: s 33C(2)(b). Section 33C(2) attempts to resolve or overcome issues which bedevilled representative actions in the courts of equity: Wong v Silkfield Pty Ltd at [12]. Section 33C has been described by the High Court as ‘central’ to the class action regime: Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 at [35]. It not only sets the height of the hurdles for commencement but provides the criteria that determine the level of cohesiveness within the group that is required when the proceedings

commence. In Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 339 ALR 11; 91 ALJR 37; [2016] HCA 44 at [105], Gordon J explained: The purpose of commencing a group proceeding is so that a substantial common question of law or fact can be decided for at least seven persons whose claims involve the same, similar or related circumstances. Section 33C expressly recognises that each group member may, as an individual, have different claims against the defendant, but the foundation of the group proceeding is that they all have an interest in the resolution of a substantial common question of law or fact.

1.18 To comply with s 33C, there must also be at least six persons in addition to the representative party who have a claim against the respondent. Where there are several respondents, must every group member have a claim against every respondent? Prior to 2014, there was conflicting authority on this issue due to the court in Philip Morris (Aust) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229 answering in the affirmative and the majority in Bray v F Hoffman-La Roche Ltd (2003) 200 ALR 607; [2003] FCAFC 153 answering in the negative. The Full Federal Court in Cash Converters International Ltd v Gray (2014) 314 ALR 154; [2014] FCAFC 111 resolved the conflict by answering in the negative. In Cash Converters, the decision proceeded on the basis that to satisfy the standing requirements a representative party must have a claim against each respondent. Further, there needs to be seven group members with a claim against one [page 8] respondent for the proceedings to be commenced. However, the addition of other group members and other respondents is not prohibited. 1.19 Section 33C also requires that the claims of the group members must be connected through the ‘same, similar or related circumstances’ and the existence of ‘a substantial common issue of law or fact’. The circumstances requirement may be thought of as ‘three sufficient relationships of widening ambit’ (Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 at 404) or as three concentric circles with ‘same’ at the centre, ‘related’ at the periphery and ‘similar’ in between the other two. The

requirement of ‘a substantial common issue of law or fact’ was interpreted by the High Court of Australia in Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 267, where it was held that ‘substantial’ means ‘real or of substance’. See Chapter 4.

Representative Party 1.20 There must be a representative party that is prepared to both bring their own claim but also represent the group. Section 33D(1) addresses standing and states that: A person referred to in paragraph 33C(1)(a) who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that other person on behalf of other persons referred to in that paragraph.

The representative party must have their own claim against the respondent at the time the class action is commenced. See Chapter 5. 1.21 The representative party represents the group members with respect to their interests in the common questions and the group members claim through the representative party to the extent of that interest. The representative party does not represent group members with respect to their individual claims: Timbercorp Finance Pty Ltd (in liq) v Collins at [49], [53], [131]–[132]. 1.22 Consideration needs to be given to who will be a suitable representative party which includes not just meeting the bare standing requirements. The representative should possess a ‘personal claim that can be used as the vehicle for determining the common questions in the action’: Federal Court, Class Actions Practice Note (GPN-CA), 25 October 2016, at [3.2]. They need to comprehend that they will likely be required to provide discovery and give evidence. The representative needs to be capable of monitoring the progress of the proceeding and giving informed instructions to the lawyers, including in relation to settlement. They also need to understand how the class action is being financed and whether they have

personal liability for the legal costs incurred in bringing the class action and/or the costs of the respondent should the proceeding fail. [page 9] 1.23 In addition, s 33T allows for group members to apply to the court for a representative party to be replaced if they are not able to adequately represent the interests of the group members. See Chapter 20.

Pleading 1.24 Class action proceedings need to comply with the usual requirements for commencement of litigation but also additional requirements in the class action legislation. Section 33ZG provides that, except as otherwise provided, nothing in Pt IVA affects: (b) the Court’s powers under provisions other than this Part, for example, its powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous, or an abuse of process of the Court; …

Consequently, the usual rules as to pleading apply to class actions and a court’s power to strike out the whole or any part of a pleading on various grounds, such as when the pleading discloses no reasonable cause of action, has a tendency to cause prejudice or embarrassment or delay in the proceeding, may be relied on: Philip Morris v Nixon at [46]. 1.25 Section 33H makes provision for the inclusion of specific matters in the originating process for a class action as follows: (1) An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included: (a) describe or otherwise identify the group members to whom the proceeding relates; and (b) specify the nature of the claims made on behalf of the group members and the relief claimed; and

(c) specify the questions of law or fact common to the claims of the group members. (2) In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members.

These requirements are designed to demonstrate that the criteria in s 33C have been met: Wong v Silkfield Pty Ltd at [8]. Consequently, a class action may be unable to proceed if the group or the common questions cannot be adequately defined: Petrusevski v Bulldogs Rugby League Ltd [2003] FCA 61 at [23], [38]. See Chapter 9. [page 10]

Substantive Law 1.26 While class actions are a form of civil procedure, they can only perform their function when coupled with a valid substantive law claim. This text does not focus on the elements of the various types of claims that can be pursued through a class action. However, when commencing a class action, like other litigation, it is necessary to ensure that the claims being pursued have reasonable prospects of success. While this is both good ethical and commercial practice, it is frequently reinforced by court rule or legislation. For example, Federal Court Rule 16.01 requires a pleading prepared by a lawyer to include a signed certificate stating that ‘the factual and legal material available to me at present provides a proper basis for each allegation in the pleading’.

Group Definition 1.27 A key decision in commencing a class action will be the structure of the group definition. The main decision is whether to employ an ‘open’ or ‘closed’ class definition. An open class seeks to include all group members who have suffered loss or damage caused by the conduct of the respondent. This is possible because group members do not need to consent or be identified to be included in the class action: s 33H. A closed class is

composed of a limited or identified number of persons rather than all those who suffered loss or damage as a result of the conduct of a respondent: Matthews v SPI Electricity Pty Ltd (Ruling No 13) (2013) 39 VR 255 at [20]. Under both approaches, the group members must be afforded an opportunity to opt out or exclude themselves from the class action: s 33J. Where an open class definition is employed, the group is usually larger but the identity of some or most of the group will be unknown. To conclude the class action it may be necessary to ‘close the class’ and have group members identify themselves as explained below in relation to Concluding a Class Action. A closed class is usually smaller (compared to an open class) but the group members are known. See Chapters 9 and 10.

Funding the Class Action 1.28 To pursue a class action, consideration must be given to how the proceedings will be funded. This requires an understanding of costs in class actions. There are two main categories of costs: the costs incurred by the representative party in bringing the proceedings (lawyer’s fees and disbursements) and the costs of the respondent. The former can be dealt with by the representative party paying those costs, possibly with contributions from group members, through a conditional or no-win no-fee arrangement, or through litigation funding. The costs of bringing the class action can usually be recovered from an opponent if the class action is successful. If the class action is unsuccessful then the representative party (but not group members) is liable for the opponent’s costs: s 43(1A). See Chapter 33. This category of costs can be addressed through litigation funding, which provides an [page 11] indemnity to the representative party, and/or by obtaining after-the-event (ATE) insurance.

Case Management of Class Actions 1.29 Class actions are subject to close case management as they are complex cases that can consume large amounts of cost and time. As with other major litigation, the increase in what is at stake also increases the number of interlocutory disputes. Class actions also have additional procedures which give rise to disputation and require court oversight. See Justice Murphy, ‘Class Actions and the National Court Framework’, Legal Leaders’ Briefing — Law Council of Australia, 7 December 2015. 1.30 The High Court of Australia has observed that the statutory class actions regime allows a court ‘to determine what is to be heard and when’ as shown by the powers to decide whether the proceeding continues as a group proceeding (s 33N); whether the representative party needs to be substituted to provide better representation (s 33T); as to the determination of questions which remain after the resolution of the common questions (s 33Q); and whether the claim of a group member can be determined in the group proceeding (s 33R): Timbercorp Finance Pty Ltd (in liq) v Collins at [68], [72]. 1.31 The Federal Court has been well positioned to utilise case management because of its individual docket system that has been in place since the creation of the court. In past practice notes the Federal Court developed a practice of an early case management hearing where the parties were expected to actively engage on a range of issues such as the description of group members, pleadings, discovery and security for costs. Further case management hearings dealt with issues such as opt-out notices, alternative dispute resolution, expert evidence and the mode of conducting the trial. This approach continues in Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016, at [7]–[8]. However, individual judges depart from the Practice Note to varying degrees. 1.32 The Federal Court’s class action Practice Note has also adopted the use of multiple judges for managing class actions. In particular, it is envisaged that, depending on the needs of the particular class action, there may be a docket judge, a case management judge and a class actions registrar. The docket judge will hear the trial of the proceeding, while the case

management judge will conduct case management hearings and resolve interlocutory disputes. The class actions registrar will assist the judges and parties to the proceeding: Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016, at [4.1]–[4.7]. The precise demarcation of roles and when they will be employed is something that can be expected to develop over time. The involvement of multiple judges permits what is usually large and complex litigation to be progressed more efficiently. It takes account of the high degree of interlocutory issues that need to be resolved in a class action, such as pleading points, and applications pursuant to ss 33C and 33N, which may require interlocutory judgments. It also [page 12] provides a ready solution to the problem a single judge may face if called on to approve a settlement (as required by s 33V), which if not approved may then necessitate that judge conducting a trial and/or delivering judgment having received confidential and privileged information. See John Emmerig and Michael Legg, ‘Twenty Five Years of Australian Class Actions — Time for Reform’ (2017) 36 Civil Justice Quarterly 164. 1.33 The Supreme Court of Victoria and the Supreme Court of New South Wales have also adopted innovative approaches to case management to deal with class actions. Both assign class actions to a judge for case management and employ early case management hearings. Victoria also pioneered the approach of assigning an Associate Judge to assist in managing the litigation. See Supreme Court of Victoria, Practice Note SC Gen 10 — Conduct of Group Proceedings (Class Actions), 30 January 2017; Supreme Court of New South Wales, Practice Note SC Gen 17 — Representative Proceedings, 12 August 2014. 1.34 All jurisdictions have also been clear that the overarching/overriding purpose that mandates consideration of justice, costs and delay applies to class actions. See Federal Court Act ss 37M, 37N and 37P; Civil Procedure Act 2005 (NSW) ss 56–60; Civil Procedure Act 2010 (Vic) ss 7–15; National Australia Bank Ltd v Pathway Investments Pty Ltd [2012] VSCA 168;

Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; 324 ALR 316; [2015] FCA 328 at [141]; Johnston v Endeavour Energy [2015] NSWSC 1117 at [91]. See also Chief Justice Allsop, Keynote Speech — Class Actions 2016 Key Topics, Law Council of Australia Forum, Sydney, 13 October 2016; Justice Beech-Jones, Representative Actions in NSW Courts, UNSW CLE, 23 March 2017.

Responding to a Class Action 1.35 A respondent to a class action will also need to consider whether class action legislation requirements, other procedural requirements and the substantive law requirements are met. 1.36 In short, this means paying close attention to the pleadings so as to be satisfied that ss 33C, 33D and 33H have been complied with and the proceedings meet the requirements for a class action to be able to be commenced. See Chapters 4, 5 and 9. However, it should be borne in mind that it will at times be difficult to assess compliance when the class action is commenced because knowledge of the representative party and group members may be incomplete. As for other litigation, consideration will need to be given to whether to challenge pleadings and seek particulars. There may also, although less commonly, be a need to seek summary judgment. The court is likely to expect any deficiencies in a class action to be raised at an early stage. 1.37 A respondent will also need to give careful consideration to the financial position of the applicant and any funding arrangements that they are relying on. [page 13] The Federal Court practice note facilitates this by requiring any litigation funding arrangement to be disclosed to the respondent, albeit with some

information redacted: Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016, at [5]–[6].

Security for Costs 1.38 Nothing in Pt IVA affects the court’s power to order an applicant to provide security for costs where the usual considerations arising under Federal Court Act s 56 and Federal Court Rule 19.02 warrant the order: s 33ZG(c)(v). The specific provision in Federal Court Act s 43(1A) that a costs order cannot be made against group members operates independently from 33ZG(c)(v) so that there is no overlap or anomaly: Bray v F HoffmannLa Roche Ltd at [137]–[145] per Carr J; at [250]–[252] per Finkelstein J; Branson J concurring with both at [214]; Madgwick v Kelly (2013) 212 FCR 1; 299 ALR 188; [2013] FCAFC 61 at [39]. Each case will turn on its particular circumstances but established relevant considerations were set out in Kelly v Willmott Forests Ltd (in liq) (2012) 300 ALR 675; [2012] FCA 1446 at [13]; Madgwick v Kelly at [7]. 1.39 However, developments in the funding of class actions have impacted the factors relevant to security for costs. For example, it is now relevant to consider the availability of litigation funding and whether afterthe-event (ATE) insurance may be utilised to oppose the giving of security or as a suitable form of security. See Chapter 33.

The Right to Opt Out 1.40 A key characteristic of Australian class actions is embodied in s 33J, which adopts an opt-out procedure for group members to inform the court that they do not wish to be part of the proceedings. An opt-out class action is commenced without the express consent of group members as permitted by s 33E. However, the right to opt out is given effect by s 33X(1)(a), which imposes the requirement that group members receive notice of the right and of the commencement of the proceedings. If a group member falling within

the defined class does not opt out then they are bound by the outcome of the proceedings: s 33ZB. See Chapters 6, 10, 24, 25 and 28. The opt-out approach may be contrasted with an opt-in class action where a group member must expressly consent to participation in the class suit. Only those group members who opt in are bound or entitled to the benefit of the judgment on the common questions: Michael Legg, ‘Funding a Class Action through Limiting the Group: What does Part IVA of the Federal Court of Australia Act 1976 (Cth) Permit?’ (2010) 33 Australian Bar Review 17 at 18. 1.41 This traditional comparison in class action design was augmented in Australia with the recognition of the ‘closed class’. The Full Federal Court held that s 33C(1) permits a representative party to commence a proceeding where they [page 14] are representing ‘some or all’ of the group members thus allowing for a proceeding on behalf of less than all of the potential members of the group: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; 244 ALR 600; [2007] FCAFC 200 at [111]. However, the right to opt out must be maintained and the group cannot be defined to allow putative group members to opt into the proceedings once they have been commenced: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [142]. See also Timbercorp Finance Pty Ltd (in liq) v Collins at [44] (‘There is no “opt in” procedure provided’). See Chapter 9.

Discontinuing a Class Action 1.42 In addition to confirming that the requirements for commencement are met, a respondent should consider whether there are grounds for challenging the use of the class action procedure. 1.43

Under s 33N, the court of its own motion or on application by the

respondent may order that the proceeding not continue as a representative proceeding where it is in the interests of justice to do so because: (a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or (b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or (c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or (d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.

The regime created by s 33N involves a two-step process. First, the court must decide whether one of the conditions in paras (1)(a)–(d) has been satisfied. If it has, then, and only then, is the court entitled to consider whether, because of the existence of that condition, it is in the interests of justice to make a discontinuance order. Even when the threshold requirements of s 33C are met, a court may still use its discretion under s 33N to order the discontinuance of a representative proceeding: see Bright v Femcare Ltd at [128]; Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [13]–[15], [179]–[192]. See Chapter 15. Other powers of discontinuance exist in ss 33L and 33M but these have been relied on to a much lesser degree than s 33N. See Chapters 13 and 14. 1.44 Meaden v Bell Potter Securities Ltd (No 2) (2012) 291 ALR 482; [2012] FCA 418 illustrates the discontinuance of a representative proceeding under ss 33N(1)(c) and 33N(1)(d). The representative party’s claim was not reflective [page 15] of the claims made by the group, the alleged representations made to group members did not have a high degree of commonality and the critical allegations would necessitate an examination of the individual circumstances

of group members. Edmonds J concluded that the trial of an action based on evidence from and concerning the representative party would not determine any issue of sufficient significance so that the process lacked any real utility. See also Meaden v Bell Potter Securities Ltd (No 3) [2012] FCA 739. A similar situation in which a representative proceeding was discontinued under Federal Court Act s 33N is Larsson v WealthSure Pty Ltd [2013] FCA 926. 1.45 In AS v Minister for Immigration (Ruling No 7) [2017] VSC 137, the representative party, AS, brought a personal injury claim in relation to her detention as an asylum seeker on Christmas Island and on behalf of all persons (adults, minors and pregnant women) held at the detention centre between 27 August 2011 and 26 August 2014 who suffered personal injury because of the failure of the defendants to provide reasonable care for their health and wellbeing (including education for minors) whilst in detention. Forrest J ‘declassed’ the proceeding relying on s 33(1)(c) because the claim of AS was individual to her and did not involve ‘the consideration of a common thread which permeates the claims of other group members’: at [73]. Forrest J contrasted the claim of AS with single event claims such as a bushfire or a product liability claim where the risk giving rise to a duty and breach was common to all group members — ‘that the failure of an electricity conductor may cause a bushfire, or that a product may produce a particular type of injury’: at [86]. 1.46 The existence of individual issues does not prevent a class action from being commenced. However, an imbalance between common and individual issues may lead to a determination that it is in the interests of justice that the class action should not proceed. 1.47 Where the court makes an order that a proceeding no longer continue under Pt IVA, the proceeding may be continued by the representative party on his or her own behalf against the respondent: s 33P(a). See Chapter 16.

Alternative Dispute Resolution

1.48 The court will expect parties to mediate (or utilise other ADR processes) to resolve the claims of the applicant and class members on one or more occasions in the course of the action. Parties can utilise private mediators, including a number of experience retired judges. Alternatively, registrars are trained and experienced in assisting the parties to achieve settlement through mediation. The mediation should be aimed at resolving the claims of all group members, not just the representative party. However, open classes and restrictions on discovery can make this challenging, although the courts have been ready to make orders to assist: Regent Holdings Pty Ltd v Victoria (2012) 36 VR 424; [2012] VSCA 221 (upholding orders for discovery aimed at facilitating mediation); Melbourne City [page 16] Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98 (opining that class closure orders may be made to facilitate settlement). 1.49 A number of examples of successful mediation exist. In the Centro shareholder class action, mediation was employed unsuccessfully at an early stage but then when undertaken during trial resulted in the claims being settled for $200 million: A Boxsell, ‘Last Big Trick in Centro Circus’, The Australian Financial Review, 11 May 2012; Kirby v Centro Properties Ltd (No 6) [2012] FCA 650. Similarly in the Oz Minerals case involving two shareholder class actions, the mediation was not successful on the day but after further negotiations a compromise was reached: Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd [2011] FCA 801 at [14]. In the Vitamins cartel class action, the parties undertook settlement negotiations, culminating in a mediation which took place over two days and involved the applicants accepting an offer from the respondents to settle the proceeding: Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388 at [17]. See also Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs appt) (in liq) (No 3) [2017] FCA 330 at [6]; McAlister v New South Wales (No 2) [2017] FCA 93 at [11]; Hopkins v AECOM Australia Pty Ltd (No 8) [2016] FCA 1096 at [14].

Multiple Class Actions 1.50 Duplicative proceedings may be struck out or stayed as vexatious or an abuse of process because ‘a double action on the part of the Plaintiff would lead to manifest injustice’: McHenry v Lewis (1882) 22 Ch D 397 at 408. 1.51 In Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 56, Merkel J had to address the existence of three competing class actions against the same respondent in respect of an explosion at the Longford gas plant in Victoria. Merkel J acknowledged that it would be vexatious and oppressive for the respondent to be subjected to more than one class action. The vexation can be explained on the basis that group definitions in multiple class actions in relation to the same subject matter may overlap so that each group member, although not a party, is seeking relief from the respondent for the same claim in multiple proceedings. However, the commencement of multiple bona fide class actions prior to the court giving substantive directions will not, of itself, be vexatious and oppressive as otherwise the first to file would be able to prevent any later competing class actions: Johnson Tiles Pty Ltd at [15]–[16]. Merkel J overcame the vexation by ordering that the first and second proceedings be consolidated, and the third proceeding be stayed: Johnson Tiles Pty Ltd at [73]–[74]. 1.52 The form in which multiple class actions may arise has changed with the advent of the closed class. The closed class approach involves a class action being commenced on behalf of a known group. Multiple closed class actions are less likely to overlap in terms of group membership and so the proceedings will not be [page 17] vexatious or an abuse of process in the sense explained above. However, the closed class may increase the possibility of multiple class actions in relation to the same subject matter as multiple groups can be formed: Michael Legg,

‘Entrepreneurs and Figureheads — Addressing Multiple Class Actions and Conflicts of Interest’ (2009) 32 University of New South Wales Law Journal 909. 1.53 In Kirby v Centro Properties Ltd (2008) 253 ALR 65; [2008] FCA 1505, three class actions were commenced that did ‘share the same nucleus of operative facts’ and would result in trials raising the same or similar issues, but did not have overlapping membership and so were not ‘a double action’ on the part of any group member. Nonetheless, there were concerns as to inconsistent results from the common issues being separately litigated and the costs and inefficiencies of multiple cases. Finkelstein J considered a number of approaches: staying one case and using another as a test case, consolidation or a joint trial. His Honour also raised for consideration the idea of a litigation committee comprised of some group members and discussed the use of an auction process for the selection of lawyers and funders. However, ultimately the case proceeded by way of a joint trial. 1.54 Another approach was adopted in Smith v Australian Executor Trustees Ltd; Creighton v Australian Executor Trustees Ltd [2016] NSWSC 17. The first class action filed was brought as an open class with lawyers acting on a conditional fee basis and the risk of an adverse costs order was addressed through an after-the-event (ATE) insurance policy. The second class action was a closed class with a litigation funder paying legal costs and indemnifying the applicant in relation to any adverse costs order. Ball J held that it was inappropriate for the court to select one class over another where the two classes ‘offer[ed] true alternatives in the sense that they have different funding models and frame their cases in significantly different ways’. Ball J determined to first allow group members to decide which class action they would opt out of, but if they did, the court would make orders removing them from the class action they had not affirmatively joined. 1.55 In McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947, Beach J dealt with two open class actions, the McKay proceedings (which also had 1500 signed up group members) and the Basil proceedings (which also had 1000 signed up group members) by closing the class in the Basil proceedings so that it was limited to the signed up group

members only and allowing the McKay proceedings to continue as an open class action. This had the result that unsigned group members could only be part of the McKay proceedings and an overlap in group membership, which could be an abuse of process, was avoided. Both class actions would be jointly case managed with a view to conducting a joint trial. The respondent’s application for a permanent stay of either class action was denied, principally because it would unnecessarily interfere with the choice of lawyer and funder by a large number of group members. [page 18]

Separate Questions and Stated Case 1.56 The separate question and stated case are procedures for identifying a central question of fact or law for resolution ahead of the other issues in the case, on the basis that the resolution of that central question may resolve the entire dispute, or assist in a settlement being reached. These procedures have been controversial as a final resolution or settlement may not follow and savings in time and expense may not materialise. However, the class action legislation requires a substantial common issue for commencement and mandates the identification of common questions. This may facilitate judicial consideration of whether the separate question and stated case procedures may be usefully employed. 1.57 In Andrews v Australian and New Zealand Banking Group Ltd (2011) 281 ALR 113; [2011] FCA 388, the applicants sought the trial of separate questions pursuant to Federal Court Act ss 33Z(1), 33ZF(1) and/or s 37P(2) and further or alternatively, Federal Court Rules O 29 r 2. The separate questions sought by the applicants concerned the issue of whether certain amounts payable by customers in defined situations (known as ‘exception fees’) were capable of amounting to a penalty. The judgment was then appealed directly to the High Court. However, after that the class action continued and did not resolve until after a trial and appeals to the Full Court of the Federal Court and then the High Court: Paciocco v Australia and New

Zealand Banking Group Ltd (2016) 333 ALR 569; 90 ALJR 835; [2016] HCA 28. 1.58 Konneh v New South Wales (No 3) [2013] NSWSC 1424 dealt with children who were detained by police for breach of bail conditions. The claims dealt with two categories of case. First, where a group member was not subject to bail but was nevertheless arrested for being in breach of bail conditions. Second, where a group member was subject to a bail condition which had been varied but they were arrested for being in breach of the original bail condition. The proceedings claimed damages for wrongful arrest, false imprisonment and assault. Garling J employed a separate question pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 28.2 to determine whether Bail Act 1978 (NSW) s 50(1)(a) applied so as to afford a defence to the state. The defence was inapplicable in one category of case but could, depending on the facts, be raised in a second category of case. 1.59 In Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; 338 ALR 188; [2016] FCAFC 148, an application for a novel form of payment to a litigation funder called a common fund order was filed and the Chief Justice directed pursuant to Federal Court Act s 20(1A) that the application be referred to the Full Court for hearing and determination.

Discovery 1.60 In keeping with the structure and operation of the class action, discovery is provided by the representative party but not group members as it is the [page 19] representative’s claim that is the vehicle for the determination of the common questions. 1.61

Moreover, the ability of an applicant to provide particulars may be

limited under an opt-out class action where the group members are not identified or if identified are not clients of the solicitor for the applicant. The feasibility of providing discovery from group members is improved when a closed class is employed because the group members will be known and will most likely have entered into a retainer with the lawyers who are acting in the proceedings. Nonetheless, the courts have not required discovery from group members in a closed class as a matter of course. Rather, the provision of discovery from group members must be for a purpose or reason that renders it appropriate or necessary to make the orders sought to ensure justice is done in the proceeding. See Chapter 32.

Expert Evidence 1.62 The subject matter of class actions, such as the impact of nondisclosure of securities information on the stock market, whether a product is defective, the cause and quantification of loss, leads to the need for expert evidence. Class actions, like other litigation, have sought to adopt efficient and effective ways of dealing with expert evidence. This has usually involved firm case management by the court, combined with the use of expert conferences or conclaves, concurrent evidence and, to a lesser extent, the use of assessors. 1.63 Expert conferences or conclaves are where the experts meet and produce a joint report that identifies the areas of agreement and disagreement. The aim of the conferences is to narrow and identify points of disagreement. For an example of orders detailing the operation of a conclave in a class action, see Hopkins v AECOM Australia Pty Ltd, Federal Court of Australia NSD757/2012, Orders, Nicholas J, 3 May 2016. 1.64 Concurrent expert evidence involves the relevant experts in a particular area being sworn in at one time and remaining together in court. The giving of evidence becomes a discussion between judge and expert, counsel and expert and amongst the experts themselves, rather than a series of exchanges between a lawyer and a witness. Questions may be asked not only by the lawyers and the judge, but also by one expert of another. The

courts have recognised that while concurrent evidence can be flexible and adapted to the particular case it is necessary to have clear ground rules for its operation: Matthews v SPI Electricity (Ruling No 10) [2012] VSC 379; Federal Court, Expert Evidence Practice Note (GPN-EXPT), 25 October 2016, Annexure B. For an examination of concurrent expert evidence in a class action, see Simon McKenzie, ‘Concurrent Evidence in the Kilmore East Bushfire Proceeding’, Supreme Court of Victoria Law Research Series, 13 April 2016. [page 20] 1.65 In the Kilmore East bushfire class action, the court appointed assessors to assist the court in understanding the evidence of the experts: Matthews v SPI Electricity Pty Ltd (Ruling No 32) [2013] VSC 630. For a discussion of the use of assessors, see Justice Beach, ‘Structural and Forensic Developments in Securities Litigation’, International Commercial Law Conference, Inner Temple, Inns of Court, London, 29 June 2016.

Concluding Class Actions — Class Closure 1.66 It is the nature of the opt-out class action that group members may not be known or identified. To achieve finality in a class action where some form of compensation or benefit needs to be assessed or distributed, it is necessary to identify the group members to whom the compensation or other benefit is to be given: Dorajay Pty Ltd v Aristocrat Leisure Ltd (2008) 67 ACSR 569 at [13]; R Mulheron, ‘The Case for an Opt-out Class Action for European Member States: A Legal and Empirical Analysis’ (2009) 15 Columbia Journal of European Law 409 at 431 n 127. 1.67 Class closure usually occurs to facilitate a mediation or settlement negotiations: Dorajay Pty Ltd v Aristocrat Leisure Ltd at [4]–[5]; Muswellbrook Shire Council v The Royal Bank of Scotland NV [2016] FCA 819. However, it may also be employed as part of the settlement process put before the court in accordance with s 33V (Perry v Powercor [2012] VSC 113; Thomas v

Powercor [2011] VSC 614) or after judgment on the common questions so as to facilitate determination of individual claims or settlement: McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1 at 3–4; Wotton v Queensland (No 7) [2017] FCA 406. Class actions that resolve at an early point may combine the requirement for group members to opt out with the class closure process. 1.68 The power to close the class has been found in s 33ZF: see Chapter 32. In the Victorian regime, Supreme Court Act 1986 (Vic) s 33ZG may also be relied upon: see Chapter 36. The form of the orders has varied. The most common was an order requiring group members to identify themselves by a certain date with failure to complete that step extinguishing any entitlement to damages relating to the claim that forms part of the class action: Matthews v SPI Electricity (Ruling No 13) at [23]. However, Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd suggests that an order requiring group members to register so as to facilitate a settlement will satisfy s 33ZF, but the further component that claims are extinguished or precluded from being brought will only satisfy s 33ZF if a settlement is actually reached. If a settlement does not eventuate, group members must be permitted to participate in any subsequent judgment. See Chapter 32.

Trial 1.69 ‘Ordinarily the trial of the action will be aimed at resolving all common questions together with any non-common questions raised by the applicant’s [page 21] personal claim (eg. the applicant’s individual claim for damages)’: Federal Court, Class Actions Practice Note (GPN-CA), 25 October 2016, at [3.2]. For example, in the DePuy ASR Hips product liability class action, Stanford v DePuy International Ltd (No 6) [2016] FCA 1452, Wigney J explained (at [26]):

In broad terms, the trial concerned the determination of the issues of fact and law that were common to the applicants and group members; primarily those issues that would determine whether DePuy and Johnson & Johnson Medical were liable, under the Trade Practices Act or in negligence, in respect of any loss or damage suffered by the applicants and group members. The quantum of any award of damages, in respect of [the applicants,] Mrs Stanford and Mr Dunsmore, was also to be determined.

1.70 The courts have taken the view that the determination of as many common questions as are of utility to the resolution of the group members’ claims is to be preferred: Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27 at [42]; Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater (No 5) [2015] NSWSC 1771 at [16]. 1.71 To aid in the determination of the common questions the court will ask the parties to agree on a set of questions or issues that are to be the subject of the trial. Failing agreement, the court will devise the questions or issues. ‘The list is a case management tool. It provides a reference point for the parties in the preparation and presentation of their cases’: Kamasaee v Commonwealth (No 10) [2017] VSC 272 at [98]. However, the Victorian Court of Appeal, in refusing an interlocutory appeal from Kamasaee (No 10), observed that ‘[q]uestions of case management, procedural fairness and relevance all inform the proper approach to be taken’: Commonwealth v Kamasaee [2017] VSCA 121 at [15]. 1.72 A recent controversy has concerned whether the common questions can go beyond the claim of the representative party, including whether if it is permissible, it can only be achieved with the formal appointment of a subgroup representative: Kamasaee v Commonwealth (No 10) at [98]. Sample group members were employed in the Kilmore East bushfire class action as a way to determine issues relevant to sub-sets of group members but which the representative party’s claim did not address: Matthews v SPI Electricity (Ruling No 5) (2012) 35 VR 615. The Victorian Court of Appeal has held that is open to a representative party to advance claims available to particular group members but not available to the representative: Timbercorp Finance Pty Ltd (in liq) v Collins [2016] VSCA 128 at [193].

Remaining Issues, Sub-groups and Individual

Issues 1.73 Where the determination of issues common to all group members does not finally determine the claims of all group members, the court may give directions in relation to the determination of the remaining issues: s 33Q(1). The directions [page 22] can include the establishment of sub-groups (s 33Q(2)) or provision for an individual group member to apply for the determination of an issue relating to that member (s 33R(1)). If an issue cannot be conveniently dealt with under s 33Q or s 33R, the court may give directions relating to the commencement and conduct of a separate individual or representative proceeding: s 33S. See Chapters 17, 18 and 19.

Settlement 1.74 A representative proceeding may not be settled or discontinued without the approval of the court: s 33V. Further, unless the court is satisfied that it is just to do so, an application for approval of a settlement must not be determined unless notice has been given to group members: s 33X(4). See Chapters 22 and 24. 1.75 The criteria for approving settlements in the Federal Court has been discussed on a number of occasions and has crystallised into two main questions: whether (a) the proposed settlement is fair and reasonable having regard to the claims made on behalf of the class members who will be bound by the settlement; and (b) the proposed settlement has been undertaken in the interests of class members, as well as those of the applicant, and not just in the interests of the applicant and the respondent(s). See, for example, Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 at [19]; Taylor v Telstra Corporation Ltd [2007] FCA 2008; Pharm-a-Care Laboratories

Pty Ltd v Australia (No 6) [2011] FCA 277; Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [6]–[8]; De Brett Seafood Pty Ltd v Qantas Airways Ltd (No 7) [2015] FCA 979; City of Swan v McGraw-Hill Companies Inc [2016] FCA 343 at [32]–[35]; Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016, at [14.3]. 1.76 The settlement approval process will also address the payment of legal fees to the applicant’s lawyer and the payment of any litigation funding fee. The court has a supervisory or protective role in relation to legal costs and funding fees proposed to be charged to class members: see Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd at [90]. 1.77 Section 33W deals with the settlement of a representative party’s individual claims. The Act allows for the representative party, with the leave of the court, to settle and withdraw from the litigation provided the court is satisfied that notice of the application has been given to group members: s 33X(1)(c). See Chapters 23 and 24.

Settlement Distribution 1.78 Once a settlement is approved, the next step is to distribute the settlement funds to group members. See Chapter 22. In Jarra Creek Central Packing Shed Pty [page 23] Ltd v Amcor Ltd [2011] FCA 671 at [23], the five main features of a distribution scheme were set out: The first is the appointment of [the applicant’s lawyers] as court appointed administrator. The second is the establishment of a procedure for the identification and verification of Group Members who are entitled to participate in the Settlement. The third is the assessment of claims by Participating Group Members and the identification of the formula by which claims are to be assessed and determined. The fourth is the establishment of a

dispute resolution mechanism. The fifth is the provision for supervision of the Scheme by the court.

1.79 The court should maintain jurisdiction over settled proceedings to be able to monitor and approve steps involving the calculation and distribution of group members’ claims and payment to the solicitors (and possibly third parties such as accountants) undertaking the settlement administration. Group members will usually need to substantiate their claim, including providing information to calculate their loss or damage. While the distribution of the settlement is a mechanical task it is also very significant in terms of the fairness of a settlement as it determines whether participation in the settlement is allowed and the actual payment to be received. There is a trade-off between precision and cost that must be managed so as to ensure settlement funds are distributed fairly: Michael Legg, ‘Class Action Settlement Distribution in Australia: Compensation on the Merits or Rough Justice?’ (2016) 16 Macquarie Law Journal 89.

Notices 1.80 Notice is central to due process or natural justice. Division 3 of Pt IVA deals with notices. Section 33X specifies the matters for which notice must be given, subject to certain discretions to dispense with notice. The court also has power to give notice at any stage of any matter to group members. Section 33Y addresses the form and context of the notices under s 33X. The provision of notice to group members is designed to allow group members to be made aware of key events in the class action and take steps to protect their interests if desired: Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd at [88]. See Chapters 24 and 25.

Judgment 1.81 Section 33Z specifies that a court may, in determining a matter in a representative proceeding, do any one or more of the following: (a) determine an issue of law;

(b) determine an issue of fact; (c) make a declaration of liability;

[page 24] (d) grant any equitable relief; (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; (f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members; (g) make such other order as the Court thinks just.

See Chapter 26. 1.82 Section 33ZB specifies that a judgment given in a representative proceeding: (a) must describe or otherwise identify the group members who will be affected by it; and (b) binds all such persons other than any person who has opted out of the proceedings under section 33J.

1.83 Section 33ZB has been described a form of statutory estoppel; however, to understand the scope of that estoppel ‘it is necessary to read s 33ZB in the context of [the class actions regime] as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions’: Timbercorp Finance Pty Ltd (in liq) v Collins at [52]. See Chapter 28.

Limitation Periods 1.84 Section 33ZE(1) provides that, upon the commencement of a representative proceeding, the running of any limitation period that applies

to the claim of a group member to which the proceeding relates is suspended. The limitation period does not begin to run again until either the member opts out of the proceeding under s 33J or the proceeding is determined without finally disposing of the group member’s claim: s 33ZE(2). See Chapter 31.

General Power 1.85 Section 33ZF provides the court with the power on its own motion, or on application by a party or a group member, to make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding. The provision has been used extensively to deal with, or to facilitate, novel developments in the class action process. See Chapter 32.

Costs 1.86 Section 43(1A), although not in Pt IVA, provides that in a representative proceeding commenced under Pt IVA, the court or judge may not award costs [page 25] against a person on whose behalf the proceeding has been commenced, that is, group members. Costs may be awarded against the representative party. There are two exceptions to the rule — when the group member becomes a representative of a sub-group pursuant to s 33Q, or has their own individual issues resolved by the court pursuant to s 33R. See Chapter 33.

Appeals 1.87 Section 33ZC deals with appeals from a judgment of the court and provides the necessary machinery for the appeal to also be a class action but

with certain alterations, such as removing the right for a group member to opt out of the proceedings. Section 33ZD extends the operation of s 33ZC to appeals to the High Court. See Chapters 29 and 30.

Entrepreneurial Class Actions 1.88 A number of recent decisions have permanently stayed ‘entrepreneurial class actions’, which were commenced by Melbourne City Investments Pty Ltd (MCI), a company which was created for the purpose of pursuing class actions against listed corporations for contravention of the continuous disclosure provisions in the Corporations Act 2001 (Cth). MCI purchased small parcels of shares in many publicly listed companies, with the cost of each parcel of shares being less than $1000. MCI put itself in a position where, if there was a breach of the continuous disclosure obligations by any of those companies, it was able to start a class action acting as the representative plaintiff: see Melbourne City Investments v Myer [2017] VSCA 187. 1.89 There have been four class action proceedings brought by MCI that have been stayed as an abuse of process: (a) In Treasury Wine Estates Ltd v Melbourne City Investments Pty Ltd (2014) 45 VR 585, the Victorian Court of Appeal held that MCI’s purpose of generating legal fees for its solicitor, Mr Elliott, by bringing the proceeding against Treasury Wine, was not a legitimate purpose. (b) In Melbourne City Investments Pty Ltd v Leighton Holdings Ltd [2015] VSCA 235, MCI was the plaintiff and Mr Elliott acted as its solicitor. The Victorian Court of Appeal observed (at [45]): It is one thing to commence a proceeding for the purpose of obtaining substantive relief, and in the knowledge that if one is successful then costs will likely follow the event. It is another to have commenced a proceeding for the predominant purpose of simply generating income for a legal practitioner in circumstances where the value of any loss meant that it was unlikely that the proceeding had been commenced for the purpose of recovering compensation. We agree with the majority in Treasury Wine that commencing a proceeding, in the circumstances we

[page 26] have described, for the predominant purpose of generating income for a legal practitioner, was and is an abuse of process.

(c) In Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2016] FCA 787, Foster J permanently stayed a second proceeding commenced against Treasury Wine. MCI’s claim was in the same terms as the first proceeding but the only difference was that MCI was not represented by Mr Elliott. His Honour found that MCI was created by Mr Elliott as a vehicle for bringing class actions quickly against listed corporations and, to the extent possible, to enable Mr Elliott to earn legal fees. His Honour found that MCI had no interest in recovering compensation (at best, $700) when it brought the proceeding. That amount of potential compensation did not justify the commencement of the proceeding nor its maintenance. Rather, his Honour found that MCI’s purpose was to gain a different and more significant financial benefit for itself. Foster J determined that (in the absence of evidence to the contrary) it was more probable than not that Mr Elliott was concerned in the affairs of MCI’s new solicitors in a way which would bring him or MCI financial reward: see summary in Melbourne City Investments v Myer [2017] VSCA 187 at [23]. (d) Finally, in Melbourne City Investments v Myer [2017] VSCA 187, the Victorian Court of Appeal permanently stayed a class action commenced by MCI against Myer, finding that it was an abuse of process for a lead plaintiff to commence and maintain a class action for the purpose of generating income in excess of compensation it may be awarded for its alleged loss: at [51]. Whelan JA observed (at [67]): But here there is an antecedent, and, to my mind, a more fundamental issue. That is MCI’s purpose or motivation in undertaking the actions which led to the very existence of its cause of action. As I indicated earlier, MCI has actively sought out the loss it claims to have suffered because its objective is to make profits, as a professional litigant and as a professional ‘loss sufferer’.

And, at [75]: Senior counsel may be correct when he submits that MCI’s activities are the latest

‘development’ in the class action area. In my view it is a development which should not be permitted because it is an abuse of process.

Main Differences Between Class Actions Regimes 1.90 The federal and Victorian regimes are almost identical. However, Victoria added ss 33KA, 33ZG and 33ZH. New South Wales did not adopt the Victorian changes but did incorporate its own variations. The Queensland regime picked up the New South Wales changes. [page 27] 1.91 Section 33KA provides the court with power to order that a person cease to be a group member or that the person not become a group member. See Chapter 12. Section 33ZG provides the court with power to require a group member or a class of group members to take steps in relation to any relief, any payment out of a fund or other benefit arising from the proceedings. See Chapter 36. Section 33ZH provides that after determining issues of liability, or where there has been an admission by a defendant, the court may order that notice of the decision or admission be given to group members. See Chapter 37. 1.92 The Second Reading Speech by the New South Wales AttorneyGeneral addressed the variations to the New South Wales class actions as follows: In relation to the Civil Procedure Act 2005, schedule 6.1 to the bill amends the Civil Procedure Act 2005 to insert a new part 10 to provide for a comprehensive representative proceedings regime in the New South Wales Supreme Court. The new regime is substantially modelled on Part IVA of the Commonwealth’s Federal Court of Australia Act 1976, plus the inclusion of two new procedural rules to clarify the existing Federal regime. … Two additional procedural rules also have been included. The first additional rule clarifies that representative proceedings may be taken against several defendants, even if not all group members have a claim against all defendants. The provision overcomes the contrary view of the Commonwealth expressed in relation to the operation of part IVA of the Federal

Court of Australia Act 1976 in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487. The second rule clarifies that it is not inappropriate for representative proceedings to be brought on behalf of a limited group of identified individuals. This is consistent with the view taken by the Full Court of the Federal Court in relation to the operation of the Federal Part IVA in Multiplex Funds Management Limited v Dawson Nominees Pty Limited (2007) 244 ALR 600.

1.93 Civil Procedure Act 2005 (NSW) s 158 is based on s 33D of the federal regime. The Victorian regime is in the same form as the federal regime. However, Civil Procedure Act 2005 (NSW) s 158(2) does not have a reciprocal provision in the federal regime. It was specifically adopted to overcome the interpretation in Philip Morris (Aust) Ltd v Nixon of s 33C(1) (a). Civil Proceedings Act 2011 (Qld) s 103C(2) is in the same terms as the New South Wales provision. However, New South Wales differs from all the other regimes in that they make it clear that, where there are several respondents, the applicant must personally have a claim against each of them. Civil Procedure Act 2005 (NSW) s 158(2) suggests that is not necessary. See Chapter 5. 1.94 Civil Procedure Act 2005 (NSW) s 166(2) reinforces the availability of a closed class by stating that such a group definition is not inappropriate for the purposes of s 166(1)(e), which mirrors the federal regime’s s 33N(1) (d). Civil Proceedings Act 2011 (Qld) s 103K(2) is in the same terms as the New South Wales provision. See Chapter 15. [page 28] 1.95 Although not mentioned in the Second Reading Speech, Civil Procedure Act 2005 (NSW) s 166(1)(d) adds an additional ground for discontinuing a class action compared to the Federal Court equivalent s 33N — namely, a representative party is not able to adequately represent the interests of the group members. Civil Proceedings Act 2011 (Qld) s 103K(1) (d) is in the same terms as the New South Wales provision. See Chapter 15.

[page 29]

CHAPTER 2 Interpretation: s 33A • OVERVIEW • The interpretation/definitions section of the legislation defines the components of representative proceedings, which in many respects differ from regular proceedings. The main components are ‘representative party’ and ‘group member’. The applicant who commences the proceeding is also the ‘representative party’ who brings the proceedings on behalf of ‘group members’ who will be bound by the outcome of the proceedings. The section also defines ‘sub-group representative party’ and ‘sub-group member’ to cater for the determination of non-common issues through the use of ‘sub-groups’. ‘Sub-groups’ are used to resolve issues that are common to only some of the group members. However, at times ‘sample group members’ are also used for that purpose. The term ‘sample group member’ is not defined in the legislation: see discussion in Chapter 17.

• LEGISLATION • Section 33A, Federal Court of Australia Act 1976 (Cth) Interpretation In this Part, unless the contrary intention appears: “group member” means a member of a group of persons on whose behalf a representative proceeding has been commenced.

“representative party” means a person who commences a representative proceeding. “representative proceeding” means a proceeding commenced under section 33C. “respondent’ means a person against whom relief is sought in a representative proceeding. “sub-group member” means a person included in a sub-group established under section 33Q. “sub-group representative party” means a person appointed to be a subgroup representative party under section 33Q.

[page 30]

Section 33A, Supreme Court Act 1986 (Vic) Definitions In this Part— “Chapter I of the Rules” means the Supreme Court (General Civil Procedure) Rules 2005; “defendant” means a person against whom relief is sought in a group proceeding; “group member” means a member of a group of persons on whose behalf a group proceeding has been commenced; “group proceeding” means a proceeding commenced under this Part; “handicapped person” means a person who is incapable by reason of injury, disease, senility, illness or physical or mental infirmity of managing his or her affairs in relation to the proceeding; “person under disability” means a minor or handicapped person; “plaintiff” means a person who commences a group proceeding as a

representative party or a person who is substituted under section 33T(1) or 33W(3); “sub-group member” means a person included in a sub-group established under section 33Q; “sub-group representative party” means a person appointed to be a subgroup representative party under section 33Q.

Section 155, Civil Procedure Act 2005 (NSW) Definitions In this Part: “Court” means the Supreme Court. “defendant” means a person against whom relief is sought in representative proceedings. “group member” means a member of a group of persons on whose behalf representative proceedings have been commenced. “proceedings” means proceedings in the Court other than criminal proceedings. “representative party” means a person who commences representative proceedings. “representative proceedings” — see section 157. “sub-group member” means a person included in a sub-group established under section 168. “sub-group representative party” means a person appointed to be a subgroup representative party under section 168.

[page 31]

Section 103A, Civil Proceedings Act 2011 (Qld) Definitions In this part— “court” means the Supreme Court. “defendant” means a person against whom relief is sought in a representative proceeding. “group member” means a member of a group of persons on whose behalf a representative proceeding has been started. “representative party” means a person who starts a representative proceeding. “representative proceeding” means a proceeding started under section 103B. “sub-group” member means a person included in a sub-group established under section 103M. “sub-group representative party” means a person appointed to be a subgroup representative party under section 103M.

• COMMENTARY • Representative Proceeding 2.1 The definition of ‘representative proceeding’ is significant because pursuing an action as a representative proceeding triggers consequences under other sections, such as s 33V, which requires court approval of a settlement or discontinuance of a ‘representative proceeding’. Representative proceedings are therefore a distinct form of proceedings within the court. 2.2 They are to be contrasted with other ‘proceedings’ commenced in the court. For example, Federal Court of Australia Act 1976 (Cth) (Federal

Court Act) s 4 is an interpretation provision and contains the following definition: “proceeding” means a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal.

2.3 In Community & Public Sector Union v Crown in Right of the State of Victoria [1999] FCA 743 at [18]–[19], Marshall J endorsed the following submissions from counsel: 4. Given the location of s 33N within Pt IVA of the Act, the reference to ‘a proceeding’ in that section should be construed within the definitions contained within that Part. S 33A of the Act defines ‘representative proceeding’ as a proceeding commenced under s 33C. It is such a proceeding which is the subject of s 33N of the Act.

[page 32] 5. The omission of the word ‘representative’ before the reference to ‘proceeding’ in the opening words of s 33N(1) does not imply that the reference to ‘proceeding’ should be attributed with the meaning set out in the definitions in s 4 of the Act. Such a construction ignores the context in which s 33N appears. Further, the references in the subparagraphs of s 33N(1) to ‘representative proceeding’, confirm that it is a proceeding of this type which is contemplated by the reference to ‘proceeding’ in the opening words of the section.

In Wilson v South Australia [2017] FCA 219 (Wilson), the court recognised the distinct nature of other forms of proceedings commenced within the court. Wilson was a Native Title case where an appeal was sought against a judgment which had the effect of replacing the applicant in the underlying proceedings (which comprised of six persons) with a new applicant (comprised of seven different persons): Wilson v South Australia (No 2) [2016] FCA 812. The orders for substitution were made pursuant to Native Title Act 1993 (Cth) s 66B(1), which has some similarities with Federal Court Act s 33T, which deals with adequacy of representation and substitution of a ‘representative party’. One issue in the case was whether the appeal was competent given the operation of Federal Court Act s 24(1AA), which relevantly provides: (1AA) An appeal must not be brought from a judgment referred to in paragraph (1)(a), (d)

or (e) if the judgment is: … (b) a decision to do, or not to do, any of the following: (i) join or remove a party; …

The court concluded (at [28]–[29]): In light of the provisions to which I have referred, the reference in s 24(1AA) (b)(i) to a ‘decision to … join or remove a party’ should not be construed so as to encompass a decision to substitute a ‘representative party’ made in the exercise of the power conferred by s 33T of the FCA Act or other decisions having the same purpose and effect. The sources of the power to remove a party and the power to substitute a representative party are distinct, the purposes of the powers are distinct and, most importantly, the legal effects of the exercise of the powers are distinct. … The decision sought to be appealed against did not involve the exercise of the power conferred under s 33T of the FCA Act nor the power conferred under s 20(5)(b) of the FCA Act or the Rules. The power exercised was that conferred by s 66B of the NT Act. For the reasons that follow, I consider decisions made pursuant to s 66B(1) of the NT Act to be analogous to

[page 33] decisions made pursuant to s 33T of the FCA Act so as to fall outside of the operation of s 24(1AA)(b)(i).

See also Ahmed v Chowdhury [2012] NSWSC 1452, where the Supreme Court of New South Wales drew a distinction between representative proceedings and other powers of the court to join multiple parties to a proceeding. In Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98, the Full Court considered the interaction between the definition of ‘representative proceeding’ in s 33A and the use of that phrase in s 33ZC. See Chapter 29. The court noted that s 33A provides that, unless the contrary intention appears, ‘representative proceeding’ in Pt IVA means a

proceeding commenced under s 33C. In Treasury Wines, the Full Court was considering an appeal, purportedly brought by a group member as a representative proceeding, on behalf of all other group members. The court noted that the applications for leave did not meet the description in s 33A because they were not commenced under s 33C. However, while the court ultimately did not have to determine the issue, they observed that (at [8]) ‘it is also arguable that s 33ZC indicates a contrary intention in relation to the meaning of “representative proceeding”, such that it is not restricted to the meaning in s 33A’. Further, the court noted (at [9]): If the expression ‘representative proceeding’ in s 33ZC(1) only means a proceeding commenced pursuant to s 33C it can be seen to exclude proceedings such as applications for leave to appeal and for leave to appeal out of time. That construction of s 33ZC(1) would seriously reduce the ability of representative parties, sub-group representatives and group members to bring appeals on a representative basis as it would mean that an appeal from an interlocutory decision or an appeal out of time could only be brought in a personal capacity, and not on behalf of group members. There is nothing in s 33ZC, or in Part IVA, to indicate a Parliamentary intention to so restrict the right to appeal in representative proceedings.

Representative Party 2.4 The definition and identification of the representative party is significant because it is that person or entity who is given certain powers and responsibilities by the legislation. For example, they may amend the group description or definition (see s 33K, Chapter 11); they may continue with their own proceeding if the representative proceeding is discontinued (see s 33P, Chapter 16); they may be replaced if they do not adequately represent the interests of group members (see s 33T, Chapter 20); they may settle their individual claim and withdraw, if the court grants leave (see s 33W, Chapter 23); they may conduct an appeal (see s 33ZC, Chapter 29); and when the court makes an award of damages and the costs incurred will not be fully recovered from the respondent they may apply for an order for a contribution to those costs from the damages awarded (see s 33ZJ, Chapter 35): Johnston v Endeavour Energy [2015] NSWSC 1117 at [63]–[73] (addressing the provisions in New South Wales). [page 34]

Role and responsibilities of representative party 2.5 The federal legislation only addresses the requirements to be the representative party through criteria for standing in s 33D and indirectly through encouraging adequacy of representation. Section 33T allows for an inadequate representative to be replaced. Victoria follows the same formula. New South Wales and Queensland adopt this approach as well but add to it by allowing for a representative proceeding to be discontinued if the representative party is not able to adequately represent the interests of group members: Civil Procedure Act 2005 (NSW) s 166(1)(d); Civil Proceedings Act 2011 (Qld) s 103K(1)(d). 2.6 Traditionally, the representative party fulfilled many of the functions and roles performed by the applicant or plaintiff in non-representative proceedings (for example, instructing the lawyers and making decisions about matters such as bringing and defending interlocutory applications and the settlement of proceedings). With the introduction of litigation funding, there are now other stakeholders who play a role in some of the key decisions. The relationships between the representative party, group members and the litigation funder are typically governed by a litigation funding agreement, which will set out the roles and responsibilities of each stakeholder. Although the representative party has the above responsibilities, it is also not uncommon for the representative party to contractually agree to consult other group members or to hold a vote in relation to major decisions, such as settlement.

Group Member 2.7 A group member is a person or entity on whose behalf the representative party pursues the proceeding. 2.8 There are various provisions which address the role and status of group members: (a) They are not required to consent to being included in the representative proceeding, except in specific circumstances (see s

(b)

(c)

(d) (e) (f)

33E, Chapter 6) but they must receive notice of the right to opt out (see s 33J, Chapter 10). The opportunity to opt out must be communicated to group members through a notice, unless the relief sought does not include a claim for damages: s 33X(1), (2), Chapter 24. Group members are able to seek to be joined to proceedings that no longer continue as representative proceedings due to orders made pursuant to ss 33L, 33M or 33N: see s 33P, Chapter 16. Statutes of limitations are suspended for group members and do not run again unless they opt out: see s 33ZE, Chapter 31. They are bound by the outcome of the proceeding (see s 33ZB, Chapter 28), but see discussion below concerning Timbercorp. Federal Court Act s 43(1A) provides that the court or a judge may not award costs against a person on whose behalf a representative proceeding [page 35] has commenced. However, ss 33Q and 33R empower the court to give directions permitting an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to a subset of group members, or to the claims of that member only. In such a case, the nominated group member, and not the representative party, is liable for the costs associated with the determination of the issue: ss 33Q(3) and 33R(2), Chapters 17 and 18; Petrusevski v Bulldogs Rugby League Club Ltd [2003] FCA 1056 at [10].

Status of group members 2.9 The Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’, Report 46 (1988) at [93]–[95] recommended that all group members be made parties to their own separate

proceedings to ensure that there was a ‘matter’ that satisfied the requirements for the exercise of federal judicial power. However, this approach was not adopted by the parliament in relation to Pt IVA: King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 121 FCR 480 at [37]; Courtney v Medtel Pty Ltd (2002) 122 FCR 168 at [35]–[36]. 2.10 Earlier authorities made it clear that group members were not ‘parties’ to the proceedings. 2.11 In the Victorian context, where the provisions are almost identical to Federal Court Act Pt IVA, Gaudron, Gummow and Hayne JJ in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at [37]–[38], [40], [50] summarised the differences between the plaintiff and the group members as follows: The persons who commence the proceeding are the plaintiffs. … Obviously, those who are named as plaintiffs in a group proceeding must know of and require the commencement of the proceeding. In general, it is they who may appeal and who are liable in costs. They stand to gain from any benefit obtained by the proceeding but they are at risk of bearing the burden of costs. The position of the plaintiffs in the proceeding may be contrasted with those whom they represent — the group members. Subject to some exceptions that do not matter for present purposes, the consent of a person to be a group member is not required. Group members may neither know of the commencement of the proceeding nor wish that it be brought or prosecuted, although Pt 4A does provide for notice to be given to group members of (among other things) the commencement of the proceeding. … Pt 4A provides for what is sometimes called an ‘opt out’, rather than an ‘opt in’, procedure. That is, persons who are group members may opt out of the proceeding and, if they do, they are taken never to have been a group member (unless the Court otherwise orders). Group members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring.

[page 36] A group member is not a plaintiff. It is right to say that a judgment obtained in the proceeding would bind those who had not opted out …

2.12

In Courtney v Medtel Pty Ltd (2002) 122 FCR 168, Sackville J stated

(at [36]): In some respects, a representative proceeding instituted pursuant to Pt IVA affects group members in much the same way as if they were parties to the litigation. In particular, s 33ZB provides that a judgment given in a representative proceeding binds all group members affected by it, other than those who have opted out of the proceeding pursuant to s 33J. It appears to be generally accepted, however, that group members are not parties to a representative proceeding. In Mobil Oil Australia Pty Ltd v Victoria [2002] HCA 27, at [50], a case involving Victorian legislation in substantially the same terms as Pt IVA of the Federal Court Act, Gaudron, Gummow and Hayne JJ noted that a ‘group member is not a plaintiff’. In Johnson Tiles Pty Ltd v Esso Australia (1999) 166 ALR 731, at 738, Merkel J regarded s 43(1A), s 33A, s 33C, and s 33ZJ of the Federal Court Act as demonstrating that group members are not parties to a representative proceeding for the purposes of costs or otherwise.

2.13 In Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167; 166 ALR 731; [1999] FCA 1363 at [31], Merkel J observed that ‘[a]s ss 43(1A), 33A, 33C and 33ZJ demonstrate, group members are not parties to a proceeding for the purposes of costs or otherwise’. 2.14 While it is accepted that group members are not ‘parties’ to the proceeding for certain purposes, their precise status is not clearly defined in the legislation and decisions which deal with different issues concerning group members are difficult to reconcile. 2.15 Some guidance is provided in decisions that deal with the question of limitation periods, which suggests that group members nevertheless are taken to institute proceedings when a claim is brought on their behalf. 2.16 In Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14; BC201700262, the applicants were seaweed farmers in Indonesia bringing representative proceedings against PTTEP for loss suffered by reason of the effect of an oil spill on the Montara Oil Field in 2009. Griffiths J determined the separate question of whether the commencement of the present proceeding under Federal Court Act Pt IVA on behalf of group members constitutes the institution of an action by group members for the purposes of Limitation Act 1981 (NT) s 44. 2.17 Limitation Act s 44(3) conditions the circumstances in which an extension of the limitation period may be granted by relevantly restricting

the exercise of such power to circumstances where the court is satisfied that facts material to the ‘plaintiff’s’ case were not ascertained by him or her until sometime after the [page 37] expiration of the limitation period and that the action was instituted within 12 months after the ‘plaintiff’ ascertained those facts. 2.18

The court concluded (at [55]–[58]):

… the applicant’s submission that the definition of ‘plaintiff’ in s 4 of the Limitation Act is sufficiently broad to include not only a person who instigates proceedings for themselves but also other persons in respect of whom a proceeding is commenced should be accepted. The definition of ‘plaintiff’ in s 4 of the Limitation Act as ‘a person bringing an action’ is expressed in sufficiently wide terms to encompass persons on whose behalf a proceeding is commenced and maintained by one or other persons, as is the case in a traditional representative proceeding or a proceeding brought in reliance upon Pt IVA of the FCA Act. The definitions of ‘representative party’ and ‘group member’ in s 33A of the FCA Act leave no room for any doubt that a representative proceeding commenced by a representative party under that statutory regime includes persons on whose behalf the proceeding has been commenced and that such persons are known as group members. Such persons are properly regarded as plaintiffs for the purposes of s 44 of the Limitation Act. I respectfully agree with the view expressed by McKerracher J in Morgan [Re Morgan; Brighton Hall Pty Ltd (in liq) [2013] FCA 970 (Morgan) at [75]] that a group member in a Pt IVA proceeding, whether named individually or not, is a person on whose behalf the proceedings have been commenced by the representative party and is to be regarded as themselves having brought the proceedings. It is equally appropriate to describe a group member as having instituted an action within the terms of s 44(1) of the Limitation Act.

Relationship Between Representative Party and Group Members 2.19 The representative party brings the proceedings on behalf of group members, but only to the extent that their claims give rise to common issues. In Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 339 ALR 11; 91 ALJR 37; [2016] HCA 44, the respondents were participants as group members in a representative proceeding brought against the applicant in 2009. The representative proceeding was unsuccessful and the applicant subsequently

brought proceedings against the respondents claiming defaults under their loans and seeking repayment. 2.20 The issue was whether the respondents should be estopped from raising a defence in the recovery proceedings that could have, according to Timbercorp, been raised in the group proceeding. The court held (at [53]– [54]): The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff

[page 38] is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding. A conclusion that the representative capacity of a plaintiff in a group proceeding is limited to the claims giving rise to common questions is consistent with principles which underlie the concept of a privy in legal interest.

2.21 The question of whether a lead applicant owes fiduciary obligations to group members is unsettled in Australia. In the United States, the equivalent of the representative party, the lead plaintiff, is regarded as a fiduciary due to their obligation to represent the collective interest of the group: see Re Cendant Corp Securities Litigation, 404 F 3d 173 at 198 (3rd Cir, 2005); Martens v Thomann, 273 F 3d 159 at 173–4 n 10 (2nd Cir, 2001); Crawford v Equifax Payment Services, Inc, 201 F 3d 877 at 880 (7th Cir, 2000). In Australia, no authoritative judicial statement exists. However, a fiduciary relationship may arise where: (a) there is the existence of an undertaking by one person to act in the interests of another: Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 96–7; Breen v Williams (1996) 186 CLR 71 at 93; (b) there is a vulnerability to another’s power or vulnerability necessitating reliance: Hospital Products Ltd v United States Surgical Corp at 142; Mabo

v Queensland (No 2) (1992) 175 CLR 1 at 200–1; Breen v Williams at 134; (c) there is a power held by a person (the fiduciary) to affect the interests of the other person in a real or practical sense: Hospital Products Ltd v United States Surgical Corp at 68, 96–7; and (d) there is a reasonable expectation that a person (the fiduciary) will act in the interests of another in and for the purposes of the relationship: Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 181. The group members may have the necessary vulnerability and expectation that the representative party would act in the group members’ interests. The representative party in directing the class action will at least impliedly undertake to act in the group members’ interests and have a power to affect group members’ interests. Consequently, the relationship between the representative party and group members is strongly arguable to be one that gives rise to fiduciary duties. 2.22 In Bray v F Hoffman-La Roche Ltd [2003] FCA 1505, where the group definition was to be amended to exclude some group members, Merkel J recognised that a potential conflict of interest arose for the representative party between her interest in procuring the amendment and her duty to the group members whose interests may be adversely affected by it: at [15]. Similarly, in Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; [2000] FCA 1925 at [22]–[23], [41], Goldberg J considered the potential conflict of interest that arises where a representative party in a representative proceeding seeks to settle a proceeding by agreeing to limit or narrow the definition of the group so as to exclude some group members from the settlement. [page 39] 2.23 However, in Timbercorp Finance Pty Ltd (in liq) v Collins and Tomes [2015] VSC 461, Robson J in considering Tomlinson v Ramsey Food Processing

Pty Ltd (2015) 256 CLR 507 and whether the plaintiff/representative party was the common law privy of group members in relation to Anshun estoppel, considered a number of factors that establish the privy relationship, including that they are typically subject to a fiduciary relationship, and stated (at [573]): ‘the plaintiff is not the subject of fiduciary duties owed to group members’. While an absolute statement, in the context it is more likely to be addressing the scope of the representative party’s fiduciary obligations and stating that the duty does not extend to non-common, individual issues that are not included in the class action.

Sub-group and Sub-group Representative Party 2.24 See the discussion in s 33Q (Chapter 17), including the discussion concerning ‘sample group members’.

Adequacy of Representation 2.25

See the discussion in s 33T (Chapter 20).

Costs 2.26

See the discussion in s 33ZF and s 33ZG (Chapters 32 and 33).

Commenced 2.27 Where proceedings have been commenced in the Federal Court but not pursuant to Pt IVA, the court has allowed for the proceeding to be converted into a representative proceeding by way of amendment: Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 89 FCR 417; Sreika v Cardinal Financial Securities Ltd [2000] FCA 1647. See also Allphones Retail Pty Ltd v Weimann [2009] FCAFC 135; Wingecarribee Shire Council v Lehman Brothers Australia Ltd (No 3) [2010] FCA 747; Watson v AWB Ltd [2007] FCA 1367.

• CASE LAW •

2.28

Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 (Gleeson CJ, Gaudron, Gummow, Kirby, Hayne and Callinan JJ)

In this case, in the context of a constitutional challenge to the Victorian representative proceeding in Supreme Court Act 1986 (Vic) Pt 4A, Gaudron, Gummow and Hayne JJ summarised the operation of the legislation (at [35]–[43]): [page 40] Part 4A of the Supreme Court Act Consideration of the validity of the amendment which introduced the provisions of Pt 4A of the Supreme Court Act must begin by examining the provisions that were introduced. Of those provisions, s 33C, which identifies when a group proceeding may be instituted, is central. That section provides that if seven or more persons have claims against the same person, those claims are ‘in respect of, or arise out of, the same, similar or related circumstances’ and the claims of all of those persons ‘give rise to a substantial common question of law or fact … a proceeding may be commenced by one or more of those persons as representing some or all of them’. A group proceeding may be commenced whether or not the relief claimed is or includes equitable relief, consists of or includes damages, includes claims for damages that would require individual assessment or is the same for each person represented. Such a proceeding may be commenced whether or not the proceeding concerns separate contracts or transactions between the defendant and individual group members or involves separate acts or omissions of the defendant done, or omitted to be done, in relation to individual group members. The persons who commence the proceeding are the plaintiffs. (In the Supreme Court proceeding out of which the matter in this court arises, there has always been only the one plaintiff — first, Schutt and now Tasfast.) Obviously, those who are named as plaintiffs in a group proceeding must know of and require the commencement of the proceeding. In general, it is they who may appeal and who are liable in costs. They stand to gain from any benefit obtained by the proceeding but they are at risk of bearing the burden of costs. The position of the plaintiffs in the proceeding may be contrasted with those whom they represent — the group members. Subject to some exceptions that do not matter for present purposes, the consent of a person to be a group member is not required. Group members may neither know of the commencement of the proceeding nor wish that it be brought or

prosecuted, although Pt 4A does provide for notice to be given to group members of (among other things) the commencement of the proceeding. The Supreme Court may dispense with the giving of that notice if the relief sought in the proceeding does not include a claim for damages and, if notice is to be given, it may be given by press advertisement, radio or television broadcast or any other means. Unless the Supreme Court is satisfied that it is reasonably practicable, and not unduly expensive, to do so the court may not order that notice of the proceeding is to be given personally to group members. There is, therefore, a real possibility that some group members would remain ‘perfectly ignorant of the proceedings, and of what is really going on’. That is, some of those who would benefit from success in the proceeding (but thereby lose the opportunity to pursue their individual claim in some way, or to some effect, different from the group proceeding) may have their rights affected without their knowing or consenting to that being done. So much follows from the fact that Pt 4A provides for what is sometimes called an ‘opt out’, rather than an ‘opt in’, procedure. That is, persons who are group members may opt out of the proceeding and, if they do, they are

[page 41] taken never to have been a group member (unless the court otherwise orders). Group members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring. Provision is made for the court to fix a date before which a group member may opt out and, except with the leave of the court, trial of the proceeding may not begin before that date. The court, on the application of a party to the proceeding, or of its own motion, may at any time, before or after judgment, order that a person cease to be, or not become, a group member. The circumstances in which the court may make such an order are stated in very wide terms. It may do so if it is of the opinion that the person does not have ‘sufficient connection with Australia to justify inclusion as a group member’, or that for any other reason it is ‘just or expedient’ that the person should not be or become a group member. And if a person who is a group member does not opt out, either before or after judgment, a judgment given in the proceeding binds that person along with all other persons who are group members at the time judgment is given. The persons bound by the judgment may, or may not, have some connection with the State of Victoria. The claims which such persons had against the defendant, if considered separately from the claims of the plaintiffs in the proceeding, or the claims of other group members, may or may not have some connection with the state. This follows from the circumstances in which a group proceeding may be brought. It may be brought when the claims dealt with by it arise out of similar circumstances and those claims give rise to a substantial common question of law or fact, conditions which are much less restrictive than requiring that the circumstances from which the claims arise, or the questions of law or fact

that are raised, be identical. The claims of some claimants may, therefore, arise out of transactions and events occurring wholly outside Victoria, and the claimants may have no connection with the state. Nonetheless, it may be noted that all group members in the group proceeding which gives rise to this matter were alleged to have claims in negligence against Mobil arising out of the negligent manufacture, in Victoria, of the fuel which it was alleged was defective. Moreover, it should also be noted that Mobil was not only served with the relevant process in Victoria, it is a company incorporated in that state. Thus, all of the claims with which this group proceeding seeks to deal are claims having at least these links (the place of commission of the alleged breach of duty and the defendant’s place of incorporation) with Victoria. [Footnotes omitted]

2.29

Courtney v Medtel Pty Ltd (2002) 122 FCR 168 (Sackville J)

The applicant sought an injunction to restrain respondents from communicating directly with group members. In considering the application, Sackville J discussed the status of the group members (at [36]): Pt IVA of the Federal Court Act clearly departs from the ALRC’s recommendation that all persons ‘with relevant and related claims be made

[page 42] parties to their own separate proceedings’. In some respects, a representative proceeding instituted pursuant to Pt IVA affects group members in much the same way as if they were parties to the litigation. In particular, s 33ZB provides that a judgment given in a representative proceeding binds all group members affected by it, other than those who have opted out of the proceeding pursuant to s 33J. It appears to be generally accepted, however, that group members are not parties to a representative proceeding. In Mobil Oil Australia Pty Ltd v Victoria [2002] HCA 27, at [50], a case involving Victorian legislation in substantially the same terms as Pt IVA of the Federal Court Act, Gaudron, Gummow and Hayne JJ noted that a ‘group member is not a plaintiff’. In Johnson Tiles Pty Ltd v Esso Australia (1999) 166 ALR 731, at 738, Merkel J regarded s 43(1A), s 33A, s 33C, and s 33ZJ of the Federal Court Act as demonstrating that group members are not parties to a representative proceeding for the purposes of costs or otherwise. But the departure from the ALRC’s proposals concerning the party status of group members does not detract from the fact that Pt IVA in substance adopts the ALRC’s approach to settlement of group members’ claims.

2.30

Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167; 166 ALR 731; [1999] FCA 1363 (Merkel J)

The proceedings arose from the Longford Gas Plant explosion in Victoria. Merkel J ruled on a motion dealing with the legality of the costs agreements entered into between the lawyers for the applicant and group members. In the context of that motion, Merkel J observed that ‘[a]s ss 43(1A), 33A, 33C and 33ZJ demonstrate, group members are not parties to a proceeding for the purposes of costs or otherwise’: at [31].

2.31

Ahmed v Chowdhury [2012] NSWSC 1452 (Lindsay J)

This case was not a representative proceeding. Instead, the parties were joined to the proceedings. The court made some general comments in its judgment distinguishing ‘representative proceedings’ from a situation where the court joins multiple parties to a proceeding. The court also noted that there was no intention by the parliament when introducing Pt 10 of the New South Wales Act to deprive the court of its traditional equity jurisdiction in those matters. The court cites authorities (at [29]) to the power of the court to make ‘representative orders for the determination of disputes between a multiplicity of parties’. The court stated (at [31]–[32]): The existence of the court’s equitable jurisdiction to make representative orders has not been affected by the repeal in 2011 of rr 7.4 and 7.5 of the Uniform Civil Procedure Rules 2005 (NSW) — an adaptation of Pt 8 r 13 of

[page 43] the Supreme Court Rules 1970 (NSW) — corresponding to the rule of court (R.S.C. Order

15 r 12) considered by Megarry J in John v Rees. Rules 7.4 and 7.5 (after amendment in 2007 as noted in Jameson v Professional Investment Services Pty Ltd (2009) 72 NSWLR 281 at 283–284 [3]–[5]) were repealed at the same time as more elaborate provisions relating to ‘Representative Proceedings’ based upon similar provisions applicable to the Federal Court of Australia and the Supreme Court of Victoria (namely, Part 10, comprising ss 155–184, of the Civil Procedure Act 2005 (NSW)), came into operation; Courts and Crimes Legislation Further Amendment Act 2010 (NSW), No 135, Schs 6.1 and 6.4; Civil Procedure Act s 4(1A), Part 10, and Sch 6 Pt 5 (para 18). There is nothing in the Attorney-General’s Second Reading Speech in support of the amending legislation (Hansard, 24 November 2010), the law reform reports to which the Attorney referred or the Explanatory Notes published with the Bill that became the Amending Act, to suggest that the enactment of ‘a comprehensive representative proceedings regime’ was intended to deprive the court of its traditional equity jurisdiction. In any event, the present proceedings do not fall within the definition of ‘representative proceedings’ as defined by s 157 of the Civil Procedure Act, and they have not been conducted as proceedings governed by the procedures for which Pt 10 of that Act provides. Those procedures are very different from those available in equity: Burns Philp & Co Ltd v Bhagat [1992] 1 VR 203 at 223. They are not what is required for a final, fair determination of these proceedings.

2.32

Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14; BC201700262 (Griffiths J)

In Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14; BC201700262, the applicants were seaweed farmers in Indonesia bringing representative proceedings against PTTEP for loss suffered by reason of the effect of an oil spill on the Montara Oil Field in 2009. Griffiths J determined the separate question of whether the commencement of the present proceeding under Federal Court of Australia Act 1976 (Cth) Pt IVA on behalf of group members constitutes the institution of an action by group members for the purposes of Limitation Act 1981 (NT) s 44. Limitation Act s 44(3) conditions the circumstances in which an extension of the limitation period may be granted by relevantly restricting the exercise of such power to circumstances where the court is satisfied that facts material to the ‘plaintiff’s’ case were not ascertained by him or her until sometime after the expiration of the limitation period and that the action was instituted within 12 months after the ‘plaintiff’ ascertained those facts. The court concluded (at [55]–[58]):

… the applicant’s submission that the definition of ‘plaintiff’ in s 4 of the Limitation Act is sufficiently broad to include not only a person who instigates

[page 44] proceedings for themselves but also other persons in respect of whom a proceeding is commenced should be accepted. The definition of ‘plaintiff’ in s 4 of the Limitation Act as ‘a person bringing an action’ is expressed in sufficiently wide terms to encompass persons on whose behalf a proceeding is commenced and maintained by one or other persons, as is the case in a traditional representative proceeding or a proceeding brought in reliance upon Pt IVA of the FCA Act. The definitions of ‘representative party’ and ‘group member’ in s 33A of the FCA Act leave no room for any doubt that a representative proceeding commenced by a representative party under that statutory regime includes persons on whose behalf the proceeding has been commenced and that such persons are known as group members. Such persons are properly regarded as plaintiffs for the purposes of s 44 of the Limitation Act. I respectfully agree with the view expressed by McKerracher J in Morgan [Re Morgan; Brighton Hall Pty Ltd (in liq) [2013] FCA 970 (Morgan) at [75]] that a group member in a Pt IVA proceeding, whether named individually or not, is a person on whose behalf the proceedings have been commenced by the representative party and is to be regarded as themselves having brought the proceedings. It is equally appropriate to describe a group member as having instituted an action within the terms of s 44(1) of the Limitation Act.

2.33

Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 339 ALR 11 (French CJ, Kiefel, Keane, Nettle and Gordon JJ)

The respondents were group members in an unsuccessful class action proceeding brought against Timbercorp in the Supreme Court of Victoria under Supreme Court Act 1986 (Vic) Pt 4A, following the collapse of Timbercorp in 2009. The respondents did not elect to opt out of that group proceeding. Subsequently, Timbercorp brought recovery proceedings against the respondents for defaulting on their loan agreements (the subject of the representative proceeding). The issue was whether the respondents should be estopped from raising a defence in the recovery proceedings that could have, according to Timbercorp, been raised in the group proceeding (Anshun). The appellant submitted that an obvious connection between the respondents’ defences

and the group proceeding is that they sought to achieve the same result, namely avoiding repayment of loan obligations. The question that arose was the extent to which the plaintiff in group proceedings may be taken to represent the legal interest of the group members, or, as the court framed the question (at [36]): A person (the second party) who seeks to make a claim in later proceedings may be bound by the actions of a party in earlier proceedings if the party in those proceedings represented the second party such that they could be described as the privy in interest of the second party.

[page 45] The first issue was whether the subject matter of the respondents’ claims were so connected to the subject matter of the group proceeding that it would be unreasonable for their claims not to have been made by the lead plaintiff in the proceeding. The second issue is whether the respondents, acting reasonably, should themselves have raised their claims. The court referred to the 2015 decision of Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [45]: In a passage in the joint reasons in Tomlinson v Ramsey Food Processing Pty Ltd, upon which the appellant relies, it was observed that traditional forms of representation which bind those represented to estoppels include representation by an agent, by a trustee, by a tutor or guardian and ‘representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding’. The joint reasons went on to say that ‘[t]o those traditional forms of representation can be added representation by a representative party in a modern class action’. These latter forms of representation, it was observed, are the subject of procedures such as opt in or opt out which guard against the collateral risks of representation, such as an estoppel. However, while that decision may be taken to acknowledge that such a relationship may arise, it was not necessary in Tomlinson to decide that issue definitively. Further, it does not answer the question of the extent to which a lead plaintiff represents the legal interests of group members and has an obligation to raise issues individual to their claims. According to the High Court, the answer to that question lies in the nature of representative proceedings and the extent to which commonality of interest may be pursued in it.

French CJ, Kiefel, Keane and Nettle JJ held (at [49]–[50]): These provisions identify the subject matter of a group proceeding as a claim which gives rise to common questions of law or of fact. The plaintiff represents the group members with

respect to their interests in that regard and the group members claim through the plaintiff to the extent of that interest. Their relationship is therefore that of privies in interest with respect to that claim. However, other provisions of Pt 4A also make plain that group members may have other, individual, claims which do not form part of the subject matter of the group proceeding.

After reviewing those provisions (ss 33Q and 33R), French CJ, Kiefel, Keane and Nettle JJ held (at [53]): The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding.

[page 46] This left open the question of whether the respondents themselves should be estopped from raising the new defences because, acting reasonably, they should have (or could have) raised their own defences or opted out of the proceedings. The court was conscious of the lack of control that individual group members have over the conduct of the proceedings and concluded that there was not the required connection between the individual defences and the common issues in the class action. As such, the respondents were not precluded from raising their defences by reason of Anshun estoppel. The court determined that they had no obligation to opt out of the representative proceedings to preserve their claims, and also did not need to seek to raise their individual issues pursuant to s 33R at their own cost risk.

2.34

Finance Sector Union of Australia v Commonwealth Bank of Australia [1999] FCA 59; (1999) 89 FCR 417 (O’Connor J)

A proceeding claiming relief under Workplace Relations Act 1996 (Cth) s 178 and Federal Court Act s 23 was filed on 12 August 1998. The applicant filed a notice of motion seeking an order that an application under Federal

Court Act Pt IVA be granted to allow them to commence a representative proceeding in relation to the existing proceedings. The respondent opposed the motion on the basis that the court had no jurisdiction to make the order. The respondent’s challenge to jurisdiction depended on the provisions of Pt IVA being used as a code for the conduct of representative proceedings under the Act so that all representative proceedings must commence under Pt IVA. A proceeding otherwise commenced under the Federal Court Act cannot be converted, by way of amendment, to become a representative proceeding: at [4]. The applicant argued that if the motion was granted then the proceeding would commence under s 33C and Pt IVA would be complied with: at [12]. O’Connor J rejected the respondent’s argument and found no jurisdictional impediment to making the order.

2.35

Sreika v Cardinal Financial Securities Ltd [2000] FCA 1647 (Tamberlin J)

The applicant failed to comply with the requirements of Federal Court Act s 33H and Federal Court Rules 1979 (Cth) O 73 r 3, including not being in the correct form of application which is Form 129 set out in Federal Court Act Sch 1. The applicant sought to amend the application by substituting one that did comply with the above requirements. The respondents submitted that the court does not have jurisdiction to permit such an amendment and that the court cannot convert an existing action into a representative action; rather, the proceeding must be dismissed and a fresh representative proceeding commenced. Tamberlin J followed [page 47] Finance Sector Union of Australia v Commonwealth Bank of Australia [1999] FCA 59 (1999) 89 FCR 417, and found that the court had power to allow for an amended application to be filed.

2.36

Morony v Reschke [2012] NSWSC 1218 (Black J)

The plaintiffs did not seek to convert the proceedings to representative proceedings under Civil Procedure Act 2005 (NSW) Pt 10. However, in the course of deciding motions addressing case management issues such as the identification and separate determinations of common questions, Black J observed (at [5]): Several decisions in respect of the corresponding provisions in Pt IVA of the Federal Court of Australia Act 1976 (Cth) suggests that it is open to the court to permit the conversion of a proceeding into a representative proceeding: Finance Sector Union of Australia v Commonwealth Bank of Australia [1999] FCA 59; (1999) 89 FCR 417; Sreika v Cardinal Financial Securities Ltd [2000] FCA 1647. Those authorities were questioned but followed in Watson v AWB Ltd [2007] FCA 1367 and were not reconsidered in Wingecarribee Shire Council v Lehman Brothers Australia Ltd (No 3) [2010] FCA 747.

2.37

Allphones Retail Pty Ltd v Weimann [2009] FCAFC 135 (Siopis, Tracey and McKerracher JJ)

Weimann commenced proceedings against Allphones in his own right. Subsequently, he sought to amend his application and statement of claim to convert it into a representative proceeding under Federal Court Act Pt IVA. The representative proceeding was to be brought on behalf of Allphones’ franchisees. The franchisees were divided into two sub-groups. The first of those sub-groups (group A franchisees) were those who had already exercised a right to renew their respective franchise agreements. The second group (group B franchisees) were those whose franchise agreements did not fall due for renewal until dates ranging between 2010 and 2012. Allphones accepted the inclusion of group A franchisees as group members but opposed the inclusion of the group B members. Allphones’ opposition was based on the fact that group B members did not at the time the amendment was sought have ‘claims’ within the meaning which should properly be attributed to that term in s 33C. The Full Federal Court found that group B members would become group A members through the passing of time and the distinction was only

temporal. The pleading revealed that group B members did have a ‘claim’ for the purpose of s 33C of the Act. Consequently, Weimann’s proceeding could be converted to a representative proceeding comprising both group A and group B franchisees. [page 48]

2.38

Wingecarribee Shire Council v Lehman Brothers Australia Ltd (No 3) [2010] FCA 747 (Rares J)

The applicant originally commenced proceedings on behalf of itself only. When it was subsequently discovered a number of other local government authorities throughout Australia alleged that they also had dealings with Lehman Brothers in relation to similar instruments the applicant sought to have the proceedings ‘converted’ into a representative proceeding by way of amendment. The respondent did not oppose the amendment. Rares J observed (at [6]): Section 33C(1) enables proceedings to be commenced under Pt IVA. The section does not require that any proceedings brought under the Part must always originate as proceedings under it. There is a reasonable basis to consider that the section is intended to be expansive, rather than constrictive, of the court’s powers. It is quite inappropriate to read provisions conferring jurisdiction or conferring powers on a court by making implications or imposing limitations which are not found in the express words: Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 504 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. In addition, the court has powers to permit the amendment of proceedings. Those powers of amendment are not displaced by anything expressly said in Pt IVA.

2.39

Watson v AWB Ltd [2007] FCA 1367 (Gyles J)

Proceedings were commenced pursuant to Federal Court Rules 1979 O 6 r 13 (now r 9.21), which is the successor of the Chancery Court’s representative action. The applicant sought to amend the pleadings to convert the

proceeding into one commenced pursuant to Federal Court Act Pt IVA. Gyles J questioned but followed Finance Sector Union of Australia v Commonwealth Bank of Australia and Sreika v Cardinal Financial Securities Ltd. The amendment was allowed.

2.40

Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 (Merkel J)

This case concerned an application for leave to amend the application and statement of claim to confine the claims being pursued to a limited category of group members, which had the effect of discontinuing the representative proceedings in relation to the claims made by those group members which would be excluded from the new group definition. Leave was granted. Merkel J observed (at [14]–[16]): Under the Federal Court Rules the Court has a general discretion to make orders amending the parties to a proceeding (Order 6) and amending pleadings (Order 13). Ordinarily, a bona fide application for an amendment, which

[page 49] complies with the relevant rules, should be granted, subject to proper terms, unless the proposed amendment is futile or would cause substantial injustice which cannot be compensated for: see for example Advanced Switching Services Pty Ltd v State Bank of New South Wales T/as Colonial State Bank (2001) 23 ATPR 41–848 at 43,486 [8]. However, special problems arise when an amendment is sought to be made on behalf of an applicant in a representative proceeding under Pt IVA of the Act which will adversely affect the interests of some group members. In the present case the applicant has been placed in a situation of potential conflict between her interest in procuring the amendment and her duty to the group members whose interests may be adversely affected by it. A similar problem arises for the legal representatives of the applicant who have an obligation to conduct the representative proceeding on behalf of the applicant in a way that is consistent with the interests of group members, irrespective of whether those persons are clients of the solicitors: see King v AG Australia Holdings Ltd (2002) 121 FCR 480 (‘King v GIO’) at 489 [27] per Moore J. In Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 (‘Williams’) at 466–467 [22]–[23] and 472 [41], Goldberg J considered the potential conflict of interest that arises where a representative party in a representative proceeding seeks to settle a proceeding by

agreeing to limit or narrow the definition of the group so as to exclude some group members from the settlement. His Honour observed at 467 [23] and 472 [41] that it was inappropriate for the Court to approve such a settlement under s 33V of the Act without giving the opportunity to group members, who would be excluded from the group by reason of the settlement, to be heard in relation to the settlement.

2.41

Wilson v South Australia [2017] FCA 219 (Charlesworth J)

In Wilson v South Australia [2017] FCA 219 (Wilson), the court recognised the distinct nature of other forms of proceedings commenced within the court. Wilson was a Native Title case where an appeal was sought against a judgment which had the effect of replacing the applicant in the underlying proceedings (which comprised of six persons) with a new applicant (comprised of seven different persons): Wilson v South Australia (No 2) [2016] FCA 812. The orders for substitution were made pursuant to Native Title Act 1993 (Cth) s 66B(1), which has some similarities with Federal Court Act s 33T, which deals with adequacy of representation and substitution of a ‘representative party’. One issue in the case was whether the appeal was competent given the operation of Federal Court Act s 24(1AA), which relevantly provides: (1AA) An appeal must not be brought from a judgment referred to in paragraph (1)(a), (d) or (e) if the judgment is: …

[page 50] (b) a decision to do, or not to do, any of the following: (i) join or remove a party; …

The court concluded (at [28]–[29]): In light of the provisions to which I have referred, the reference in s 24(1AA) (b)(i) to a ‘decision to … join or remove a party’ should not be construed so as to encompass a decision

to substitute a ‘representative party’ made in the exercise of the power conferred by s 33T of the FCA Act or other decisions having the same purpose and effect. The sources of the power to remove a party and the power to substitute a representative party are distinct, the purposes of the powers are distinct and, most importantly, the legal effects of the exercise of the powers are distinct. … The decision sought to be appealed against did not involve the exercise of the power conferred under s 33T of the FCA Act nor the power conferred under s 20(5)(b) of the FCA Act or the Rules. The power exercised was that conferred by s 66B of the NT Act. For the reasons that follow, I consider decisions made pursuant to s 66B(1) of the NT Act to be analogous to decisions made pursuant to s 33T of the FCA Act so as to fall outside of the operation of s 24(1AA)(b)(i).

[page 51]

CHAPTER 3 Application: s 33B • OVERVIEW • The application provision specifies the time from when a cause of action may be pursued through a representative proceeding. The Federal Court and the states have adopted different approaches. The Federal Court requires that the cause of action must arise after the legislation which introduced Pt IVA commenced. The Federal Court of Australia Amendment Act 1991 (Cth) commenced on 4 March 1992. Victoria, New South Wales and Queensland all permit a cause of action to be pursued through a representative proceeding regardless of whether it arose before or after the dates on which the legislation took effect: 1 January 2000 (in the case of Victoria), 4 March 2011 (in the case of New South Wales) or 1 March 2017 (for Queensland).

• LEGISLATION • Section 33B, Federal Court of Australia Act 1976 (Cth) Application A proceeding may only be brought under this Part in respect of a cause of action arising after the commencement of the Federal Court of Australia Amendment Act 1991.

Section 33B, Supreme Court Act 1986 (Vic) Application (1) This Part applies to a cause of action whether arising before or on or after 1 January 2000. (2) This Part does not apply to— (a) a proceeding under sections 34 and 35 of the Act; or [page 52] (b) a proceeding concerning— (i) the administration of the estate of a deceased person; or (ii) property subject to a trust; or (c) a proceeding commenced under Order 18 of Chapter I of the Rules.

Section 156, Civil Procedure Act 2005 (NSW) Application This Part applies to proceedings commenced after the commencement of this section, whether the cause of action arose before or arises after that commencement.

Section 111, Civil Proceedings Act 2011 (Qld) Application of pt 13A (1) Part 13A applies only to a proceeding started after the commencement. (2) The proceeding may be started even if the cause of action the subject of the proceeding arose before the commencement.

• COMMENTARY • A Cause of Action Arising 3.1 Given the different approaches between the jurisdictions, this provision only has relevance for Federal Court proceedings. In New South Wales, Victoria and Queensland, the legislation applies to causes of action which arise before or after commencement of the legislation. 3.2 For the Federal Court, while the legislation only applies where causes of action accrue after commencement of the provisions (that is, after 5 March 1992), it is permissible to commence proceedings where multiple causes of action exist, some of which accrued after the commencement of the provisions: see The Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd [1997] FCA 599 (or if using Austlii [1997] FCA 607). 3.3 Assessing when a cause of action arises for the purpose of s 33B may be assisted by reference to cases dealing with statutes of limitations that consider a similar question. A cause of action accrues when all of the elements of the cause of action have occurred. In cases where loss or damage is the gist of the action that will be when the loss or damage actually occurs. [page 53] For example, in James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347, Trade Practices Act 1974 (Cth) s 82(2) provided ‘An action under sub-section (1) may be commenced at any time within three years after the date on which the cause of action accrued’. Toohey J held that the cause of action accrues when loss and damage is suffered: at [392]. 3.4 The same position was adopted in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525. The High Court majority (Mason CJ, Dawson, Gaudron and McHugh JJ) observed (at 526–7, 532) that a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage. This means that a distinction is drawn

between a potential for loss and the time when the potential has come to fruition as an actual loss. The majority explained (at [527]): When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of ‘loss or damage’. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired.

See also Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35; 137 ALR 544.

• CASE LAW • 3.5

The Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd [1997] FCA 599 (or if using Austlii [1997] FCA 607)

This was a class action brought by the applicants on their own behalf and in a representative capacity for all persons who directly or indirectly acquired value pre-mix concrete originally manufactured and/or supplied by the respondents in the council area. The court ordered the proceedings no longer continue as a representative proceeding, observing (at [23]): It is appropriate to mention here the argument of the respondents that s 33B the Federal Court of Australia Act only permits a proceeding to be brought as a representative proceeding under Part IVA ‘in respect of a cause of action arising after’ the commencement of the relevant amendment to that Act, ie, after 5 March

[page 54] 1992. Given that declarations are sought in respect of conduct commencing in June 1989, it

is said that the cause of action for each of those declarations arose before 5 March 1992. That may well be a good answer to the action as presently pleaded. But I think the action, if it continues as a representative one, can be repleaded to claim on each cause of action that arose upon the purchase after 5 March 1992 by each group member of concrete at cartel prices.

However, in this case, recasting of the action in that way meant that the claim could not continue as a class action. That was because the range of persons eligible to be group members is confined to speculators who had to sell on the depressed market that ended in about June 1992. If those were the group members who have suffered loss, only those speculators who sold in a quite short period of a few months after March 1992 are likely to have any claim against the respondents.

3.6

Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 (Gleeson CJ, Gaudron, Gummow, Kirby, Hayne and Callinan JJ)

Callinan J, in describing the Victorian legislation which inserted s 33B, observed (at [149]): By s 2(2) of the Victorian Act, that Act is deemed to have commenced on 1 January 2000, and is accordingly applicable to the Victorian proceedings even though they were commenced before its enactment.

3.7

Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 (Black CJ, Sackville and Emmett JJ)

The Full Federal Court (at [11]) described the Pt IVA regime, including: Part IVA was inserted into the Federal Court Act in 1991 by the Federal Court of Australia Amendment Act 1991 (Cth), which commenced on 4 March 1992. Proceedings may be brought under Pt IVA only in respect of a cause of action arising after that date: s 33B.

3.8

National Mutual Life Association of

Australasia Ltd v Reynolds [2000] FCA 267 (Spender J) The proceedings were based on claims for relief by or on behalf of the shareholders and noteholders who subscribed to a prospectus issued by Interchase Corp Ltd on or about 22 June 1987 in connection with a retail development by Interchase in [page 55] the Queen Street Mall in Brisbane, called ‘The Myer Centre’. The shareholders subscribed nearly $200 million and the noteholders advanced around $120 million. The allotment date for the shares and notes was 22 July 1987. On 10 March 1992, Interchase entered a contract to sell the Myer Centre for a purchase price of $200 million. The sale was completed on 17 July 1992. On 20 October 1992, Interchase was wound up by order of the Federal Court of Australia. The proceedings were not commenced until 9 July 1993 and were not served on the respondents until late 1997 or early 1998. Claims were made against valuers, leasing agents and directors of Interchase. Notices of motion filed by the respondents sought a declaration that the causes of action did not arise after the commencement of the Federal Court of Australia Amendment Act 1991. The applicants submitted that the date of the winding up is the date on which the applicants say their cause of action accrued on which they suffered loss and damage. The respondents argued that the cause of action arose at the time of the allotment of the shares and notes. Spender J (at [121]–[122]) concluded that while it was unclear as to why loss or damage was not sustained until the date of the winding up of Interchase, it was premature to decide the point in advance of the hearing of the action.

3.9

Poignand v NZI Securities Australia Ltd (1992) 37 FCR 363; 109 ALR 213 (Gummow J)

The proceedings arose out of a finance facility where an original offer contained an option for the entity seeking finance to extend the facility for two years. The offer that was signed and accepted in April 1987 gave the option to the provider of the finance. When the original terms of the facility expired the provider of the finance did not exercise the option and the facility had to be repaid on 3 April 1991. Repayment was not called for until late 1991. On 16 March 1992, the provider of the finance appointed a receiver and manager over the assets of the entity that had received the finance but not repaid it. Proceedings were commenced on 17 June 1992. 3.10 The representative proceedings were challenged on a number of grounds including that the proceeding was in respect of a cause of action which arose before the commencement date of 5 March 1992. Gummow J acknowledged that many of the events occurred before 5 March 1992 but also observed that the receiver and manager had been appointed after that date. His Honour stated (at 221): In all the circumstances, I cannot find that on their present motion the respondents have clearly demonstrated, within the meaning of the General Steel principles, that the present proceeding is brought otherwise than in respect of a cause of action arising after 5 March 1992.

[page 56] The approach adopted by Gummow J was to view the reliance on s 33B as being akin to a motion for summary dismissal for which the standard under General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129–30 requires a high degree of certainty before the proceeding will be dismissed. As a result, Gummow J did not decide when a cause of action arose.

[page 57]

CHAPTER 4 Commencement of Proceedings: s 33C • OVERVIEW • Section 33C is one of the threshold requirements which must be satisfied in order to validly commence a representative proceeding. Critically, it is concerned with the commencement of proceedings — it does not concern the subsequent conduct of litigation. It operates in conjunction with s 33H (Chapter 9) (and also s 33D (Chapter 5)). In determining whether the requirements of s 33C have been met, reference needs to be made to pleadings or other documents in which the claims of the representative party and the group members are made. Section 33H is intended to facilitate that assessment. For this reason, ss 33C and 33H inform one another and ought to be read together. With one key distinction, the Victorian, New South Wales and Queensland provisions are substantially the same as in the Federal Court. The key difference is that Civil Procedure Act 2005 (NSW) s 158(2) makes it clear that it is not necessary for all group members to have a claim against all defendants (see discussion below and in Chapter 5). That issue has been the subject of competing views in the Federal Court, until recently.

• LEGISLATION • Section 33C, Federal Court of Australia Act 1976 (Cth) Commencement of proceeding (1) Subject to this Part, where:

(a) 7 or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all those persons give rise to a substantial common issue of law or fact; a proceeding may be commenced by one or more of those persons as representing some or all of them. [page 58] (2) A representative proceeding may be commenced: (a) whether or not the relief sought: (i) is, or includes, equitable relief; or (ii) consists of, or includes, damages; or (iii) includes claims for damages that would require individual assessment; or (iv) is the same for each person represented; and (b) whether or not the proceeding: (i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or (ii) involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

Section 33C, Supreme Court Act 1986 (Vic) Commencement of proceeding (1) Subject to this Part, if— (a) seven or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of,

the same, similar or related circumstances; and (c) the claims of all those persons give rise to a substantial common question of law or fact— a proceeding may be commenced by one or more of those persons as representing some or all of them. (2) A group proceeding may be commenced— (a) whether or not the relief sought— (i) is, or includes, equitable relief; or (ii) consists of, or includes, damages; or (iii) includes claims for damages that would require individual assessment; or (iv) is the same for each person represented; and (b) whether or not the proceeding— (i) is concerned with separate contracts or transactions between the defendant and individual group members; or (ii) involves separate acts or omissions of the defendant done or omitted to be done in relation to individual group members.

[page 59]

Section 157, Civil Procedure Act 2005 (NSW) Commencement of representative proceedings (1) Subject to this Part, where: (a) 7 or more persons have claims against the same person, and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances, and (c) the claims of all those persons give rise to a substantial common question of law or fact,

proceedings may be commenced by one or more of those persons as representing some or all of them. (2) Representative proceedings may be commenced: (a) whether or not the relief sought: (i) is, or includes, equitable relief, or (ii) consists of, or includes, damages, or (iii) includes claims for damages that would require individual assessment, or (iv) is the same for each person represented, and (b) whether or not the proceedings: (i) are concerned with separate contracts or transactions between the defendant in the proceedings and individual group members, or (ii) involve separate acts or omissions of the defendant done or omitted to be done in relation to individual group members.

Section 103B, Civil Proceedings Act 2011 (Qld) Starting Proceeding (1) Subject to this Part, where: (a) 7 or more persons have claims against the same person, and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances, and (c) the claims of all those persons give rise to a substantial common question of law or fact, proceedings may be commenced by one or more of those persons as representing some or all of them. (2) Representative proceedings may be commenced: (a) whether or not the relief sought: (i) is, or includes, equitable relief, or

[page 60] (ii) consists of, or includes, damages, or (iii) includes claims for damages that would require individual assessment, or (iv) is the same for each person represented, and (b) whether or not the proceedings: (i) are concerned with separate contracts or transactions between the defendant in the proceedings and individual group members, or (ii) involve separate acts or omissions of the defendant done or omitted to be done in relation to individual group members.

• COMMENTARY • Threshold Requirements 4.1 Section 33C(1) establishes three threshold requirements for commencement of a representative proceeding: seven or more persons have claims against the same person; the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and the claims of all those persons give rise to a substantial common issue of law or fact. On one view those requirements appear onerous; however, after clarification in some early Pt IVA cases, they are easily satisfied in practice: see AS v Minister for Immigration (Ruling No 7) [2017] VSC 137 at [42]. While satisfaction of those elements does not necessarily mean that the proceedings will be an efficient means of resolving group claims, it does mean that it is

relatively easy to commence a claim for and on behalf of a group of claimants. 4.2 While s 33C(1) places some minimalist constraint on the ability to commence a representative proceeding, s 33C(2) specifies certain matters which cannot be used to challenge the commencement of a claim. Representative proceedings may be commenced whether or not the relief sought includes equitable relief, and whether or not the relief claimed is different for each group member (such as a claim for damages). Proceedings which are concerned with separate contracts or transactions or involve separate acts or omissions can also be the subject of a representative proceeding. Subsection 33C(2), read in conjunction with s 33C(1), makes it clear just how broad the potential application of Pt IVA is. [page 61]

Seven or More Persons 4.3 The first threshold requirement for commencing a representative proceeding is found in s 33C(1)(a). There must be seven or more persons who have a claim against the same person. The purpose behind the sevenperson requirement is not entirely clear. It has been suggested that it guards against ‘inappropriate’ use of a representative proceeding where there are few group members, but it is difficult to see how it achieves that aim. This requirement was added by the legislation which introduced Pt IVA into the Federal Court of Australia Act 1976 (Cth) (Federal Court Act). It was not proposed by the Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988). In Tropical Shine Holdings v Lake Gesture (1993) 45 FCR 457, the court considered the ALRC Report and stated (at 461): The Law Reform Commission proposed a provision (cl. 7 of its draft Bill) making it lawful for a person (‘the principal applicant’) who commences a proceeding in the Court also to commence, by the same application, group members’ proceedings between each group

member as applicant and the respondent. The Commission did not recommend a precondition that there be at least seven group members. The reason was that it proposed that the initiating process need not identify, or even specify the number of, the group members: see cl. 13 of the Commission’s draft Bill. However, in order to guard against the inappropriate use of a representative proceeding where there were few group members, the Commission suggested that the Court be empowered to sever the conduct of the proceeding if, at any stage, it found that there were fewer than seven group members: see cl. 10 of the draft Bill. As will be apparent, the enacted legislation adopts the concepts behind the Commission’s draft cll. 13 and 10: see ss. 33H and 33L. But it adds the restriction contained in s. 33C(1) (a), limiting the commencement of a proceeding under the Part to cases where ‘7 or more persons have claims against the same person’. What is the effect of this addition? It cannot have been intended to require that the application commencing the proceeding demonstrate that at least seven members have associated claims against the respondents. Such a requirement would conflict with s. 33H(2), which expressly states that it is not necessary for that document to specify the number of group members. During the course of argument, counsel referred to the Explanatory Memorandum and the Minister’s Second Reading Speech in respect of the Bill that enacted Part IVA. As s. 33C was a governmental innovation departing from the recommendations of the Law Reform Commission, it might have been expected that these documents would explain what the Government had in mind; and also how the clause that became s. 33C was to be reconciled with the clause that became s. 33H. But neither the Explanatory Memorandum nor the Second Reading Speech provides assistance. Both documents simply paraphrase the clause.

[page 62] As outlined above, neither the Second Reading Speech nor the Explanatory Memorandum explain the reason for the seven-person requirement. However, the legislature included it in any event. 4.4 While s 33H(2) provides that it is not necessary to name, or specify the number of, the group members — so as to give effect to the ability to commence an ‘opt-out’ or ‘open class’ representative proceeding — the court must be satisfied that there are seven or more persons who have a claim. In Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164 at 166, the court held that the requirement that there be seven or more persons merely means that a representative party must: … be able to satisfy the Court at some appropriate time that, by its nature and assuming it

has substance, their claim against any particular respondent is shared with at least [six] other persons.

In Tropical Shine Holdings Pty Ltd v Lake Gesture Pty Ltd at 462, Wilcox J considered whether s 33C(1)(a) required the termination of a proceeding where there were subsequently found to be fewer than seven persons with claims: But for one consideration, a possible approach to s. 33C(1)(a) would be to say that it was intended to ensure termination of a representative proceeding where there were found to be less than seven persons with claims. This would be a drastic course, often productive of injustice and inconvenience; and it would conflict with the policy expressed by s. 51 of the Federal Court of Australia Act that proceedings are not invalidated by a formal defect or irregularity unless the Court thinks substantial and irremediable injustice has occurred. Nevertheless, it would provide a role for para. (a). On this approach, although the number of group members need not be specified in the legislation (s. 33H(2)), s. 33C(1)(a) would protect respondents from having to deal with group proceedings involving few group members. However, this possible explanation cannot survive consideration of s. 33L. That provision not only enables the Court to order that a proceeding with less than seven group members not continue under Part IVA; it enables the Court to allow it to continue — a provision inconsistent with the notion that s. 33C(1)(a) requires automatic termination of a proceeding with less than seven claimants. I think the only way of making sense of s. 33C(1)(a) is to interpret it as restricting the use of Part IVA to claims that, by their nature and assuming that they have substance, are shared by at least seven persons. I use the word ‘shared’ in the sense explained by paras. (b) and (c); that is, that the claims of all the persons are in respect of, or arise out of, the same, similar or related circumstances and give rise to a substantial common issue of law or fact. Interpreted in this way, the paragraph fulfils the function of weeding out cases that should clearly not be brought as representative proceedings because it is obvious that less than seven people share the claim, whilst preserving the principle embodied in s. 33H.

[page 63] 4.5 A practical question arises in determining at what point in time the seven- person requirement must be met. In .Au Domain Administration Ltd v Domain Names Australia Pty Ltd (2003) 202 ALR 127 at 129, Finkelstein J noted that for the purposes of s 33C(1)(a) it may not always be possible to determine the size of a group with precision. In such cases, whether or not the number exceeds seven can be inferred simply from the type of action being prosecuted, such as in ‘mass tort’ actions.

In situations where it becomes apparent that there are fewer than seven group members, consideration should be given to s 33L (Chapter 13). Section 33L provides that if, at any stage, it appears likely that there are fewer than seven group members, the court may order (on such conditions, if any, that it thinks fit) either that the proceeding continue, or that it no longer continues, under Pt IVA.

Person 4.6 The Act itself does not define ‘person’. Acts Interpretation Act 1901 (Cth) s 22(1)(a) states that expressions used to denote persons, such as ‘person’, include a body politic or corporate, as well as an individual. Regulators such as the Australian Competition and Consumer Commission (ACCC) have been held to be a ‘person’ within the meaning of s 33C(1)(a): see Australian Competition and Consumer Commission v Golden Sphere International Inc (1998) 83 FCR 424 at 442 and the discussion in Chapter 34.

Claims 4.7 In Gibson v Malaysian Airline Systems Berhad [2016] FCA 1470, the court held that ‘claims’ in s 33C(1)(a) is limited to those that the court has jurisdiction to hear. If the applicant pleads a case that the court does not have jurisdiction to hear, s 33C(1) has not been complied with, as the class has not been properly defined. 4.8 Beyond the above, the word ‘claims’ in s 33C(1)(a) has been given an expansive interpretation by the courts and is not limited to a cause of action: see, for example, Allphones Retail Pty Ltd v Weimann [2009] FCAFC 135 at [80] per Tracey and McKerracher JJ; Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 523; King v GIO Australia Holdings Ltd (2000) 100 FCR 209 at [24], [34]–[35]; Re Morgan; Brighton Hall Securities Pty Ltd (in liq) [2013] FCA 970 at [72]. According to Carr J in Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 at 343–4, one of the purposes for the introduction of Pt IVA was to give access to the courts to those who had been denied justice because of the high

cost of undertaking individual actions. Given this, Finkelstein J stated (at 372) that it is unlikely that the word ‘claim’ in s 33C(1) is intended to be a reference to only the remedy sought in the action. His Honour believed that the better view was that the word means the facts which give rise to the action as well as to the legal basis of the action. [page 64] 4.9 In Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd at 523, Lindgren J set out the following five principles in relation to the meaning of ‘claims’ in Federal Court Act s 33C(1)(a): As to the meaning of ‘claims’ in s 33C(1)(a), certain matters are tolerably clear. First, the claims must be claims recognised by the law. Second, s 33C(2)(a)(i) shows that a claim for discretionary equitable relief qualifies, and, therefore, that the ‘claims’ to which s 33C(1)(a) refers are not confined to claims to relief as of right. Third, whatever the word ‘claims’ in the provision denotes, they have an existence independent of, and antecedent to, the commencement of the proceeding, since it is only if seven or more persons have claims against the same person that a proceeding under Pt IVA may be commenced by one or more of them. Perhaps this signifies that it is not a sufficient condition of the existence of a claim that a claim has been ‘made’, ‘asserted’ or ‘threatened’. Fourth, for obvious reasons, s 33C(1)(a) does not speak of a ‘right’ or ‘entitlement’ to relief — a matter which cannot be known until a final hearing. Fifth, it is not required that the persons who have the claims be aware that they have them, let alone that they have asserted them.

4.10 In Allphones Retail Pty Ltd v Weimann, Tracey and McKerracher JJ stated that a ‘claim’ is to be given a wide meaning: at [80]. The court was considering an argument that because the dispute concerned rights of renewal of franchise agreements which were not to be executed until some future point in time the proceeding was entirely hypothetical. Their Honours held that the franchisees had a ‘claim’ within the meaning of s 33C(1)(a) (at [82], [89]–[91]): … there is no doubt that there is a dispute in existence. The dispute is not divorced from the facts, the dispute is not based on hypothetical facts and the dispute has procedural significance …

… whether or not such relief would or will be granted, is not to the point, the question is whether the claim is arguable … The pleaded case relates to a current commercial dynamic in which there is major disputation and significant commercial concern on the part of all parties. It is appropriate for the application of s 33C FCA. As the learned primary judge said (at [85]): … the very purposes and object of the representative proceeding provisions of the Federal Court Act were designed for a case such as this. A representative proceeding [that] includes both group A and group B franchisees enables a relatively inexpensive and efficient means of clarifying the contractual rights of the franchisees in both categories.

4.11 In Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179, the court held that the use of the term ‘claim’ in s 33C(1)(a) [page 65] equated to the use of the term in Federal Court Act s 22 and accordingly it extends to a proceeding seeking the imposition of a penalty. The court stated (at [20]): Clearly, ‘claim’ [in Federal Court Act s 22] is used to encompass everything that might lawfully be brought before the Court for a remedy. There is no reason to think that the same word was not used with the same general sense in s 33C.

4.12 There is no requirement that the ‘claims’ need to be identical. In King v GIO Australia Holdings Ltd, Moore J held (at [30]) that the claims of the representative party and group members must have something sufficient in common to satisfy the requirements of the Act (per ss 33(1)(b) and 33(1) (c)), but that it does not follow that each must pursue the same claim against each respondent. In order to permit their prosecution as part of a representative proceeding, the various claims of group members need not result in the same relief or be based on the same conduct or arise out of the same transactions, provided those claims are founded in the ‘same, similar or related circumstances’ and give rise to a ‘substantial common issue’ of either fact or law. If one claim is brought which is maintainable by the representative party and all members of the group, then the proceedings may

proceed under Pt IVA, notwithstanding that one representative party cannot maintain one of the causes of action pursued by other members of the group: at [34].

Claims for injunctive relief 4.13 There has been debate about whether claims for injunctive or declaratory relief are ‘claims’ within the meaning of s 33(1)(a). However, in Smith v University of Ballarat (2006) 229 ALR 343; [2006] FCA 148 at [32], Young J made it clear that claims for injunctive relief constitute representative proceedings and can properly be considered a ‘claim’ within the meaning of Pt IVA of the legislation. This is further discussed by reference to s 33C(2)(b) below.

Against the Same Person 4.14 This aspect of s 33C(1)(a) was previously the subject of considerable controversy. 4.15 In the Federal Court and Victoria, the legislation does not address whether every group member must have a claim against every respondent. This is contrasted to the position in New South Wales and Queensland, where s 158(2) and s 103C(2) make it clear that every group member does not need to have a claim against every defendant. As outlined below, there have been conflicting authorities. However, the position in the Federal Court and the Supreme Court of Victoria has now been resolved following the Full Court of the Federal Court decision in Cash Converters International Ltd v Gray (2014) 223 FCR 139, which put the issue beyond doubt [page 66] and confirmed that in the Federal Court, it is not necessary for each group member to have a claim against each respondent (at [33]):

We do not accept that the proper construction of s 33C(1) requires that every group member has a claim against all respondents if there is more than one respondent.

The Full Court first sought to construe the statute by reference to its text, context and purpose. The Full Court held that requirements not mandated by the legislation for commencing a class action should not be otherwise imposed, citing Wong v Silkfield (1999) 199 CLR 255 at [11]–[13]. Provided there are seven class members with a claim against one respondent then the proceedings may be commenced. The addition of other group members and other respondents is not prohibited. Indeed, joinder may be employed to add other respondents to the proceedings in respect of whom only some group members have claims. The Full Court also considered the earlier Full Court authorities, Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 and Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317, discussed below. The Full Court was of the view that the specific issue raised in the current appeal was not in issue in Philip Morris because it was not in dispute. The parties had accepted that each group member must have a claim against each respondent. If a point is not in dispute in a case, then the decision lays down no legal rule concerning that decision. The Full Court considered Bray and acknowledged that each of the three judges in that Full Court addressed the issue differently. Carr J stated that it was not necessary to decide the question but he agreed with Finkelstein J’s reasons. Finkelstein J, as explained above, disagreed with Philip Morris. Branson J was not persuaded that Philip Morris was clearly wrong and considered that it should be followed. In the current judgment, the Full Court endorsed the reasoning of Finkelstein J without explaining whether the point had needed to be resolved in Bray. Finkelstein J (at [248]) stated: It can immediately be acknowledged that a properly constituted representative proceeding must involve a group of seven or more persons each of whom has a claim or claims against one person. But that is all the section requires. It simply does not address the situation where some members of the group, say 10 out of a group of 15, also have claims (that is, causes of action) against some other person, being causes of action which satisfy both s 33C(1)(b) (each claim arises out of the same circumstances) and s 33C(1)(c) (each claim gives rise to common issues of law or fact).

For a discussion of the ramifications of the Cash Converters decision, see John Emmerig and Michael Legg, ‘Full Federal Court Relaxes Commencement

Requirements for Australian Class Actions’ (2014) 3 Journal of Civil Litigation and Practice 92. 4.16 Prior to this clarification, there had been conflicting authorities in the Federal Court and in Victoria. The issue was first considered in Symington v Hoechst Schering Agrevo Pty Ltd. In that case, Wilcox J stated (at 167): [page 67] … where there is a group of seven or more persons, all of whom have claims against a particular person, then any one of those seven or more persons has a sufficient interest to commence a representative proceeding against that person on behalf of the other members of the group. I think it is clear that the applicant — that is to say, the representative party — must himself or herself have standing to sue the particular respondent and, where there is more than one respondent, each of them. It is not enough that the applicant has standing to sue one respondent and other people have claims against some other respondent which arise out of similar or related circumstances and give rise to a substantial common issue of law or fact.

4.17 The first appellate consideration of the issue was in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487. Sackville J stated (at [126]– [127]): s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents).

Sackville J reached the conclusion based on the text of s 33C(1)(a) and the approach taken in Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988). It should be noted, however, that in Philip Morris v Nixon, the applicants conceded that each group member must have a claim against each respondent in order to satisfy the requirements of s 33C(1)(a), and so the issue was not argued. The matter proceeded on the assumption that each group member was required to have a claim against each respondent. The

result was that the court did not have the benefit of hearing submissions to the contrary. Additionally, it was held (at [7]–[9], [165]–[166]) that the claims could not be described as arising out of the same, similar or related circumstances, as required by s 33C(1)(b). Therefore, it is arguable that it was not necessary for the court to decide whether each group member was required to have a claim against each respondent. Each member of the court accepted that this was a requirement of s 33C(1)(a): see at [3], [5] per Spender J; [17], [20] per Hill J; and [126]–[127] per Sackville J. 4.18 The position in Philip Morris v Nixon was subsequently followed in a number of cases: see, for example, Bright v Femcare Ltd (2000) 175 ALR 50 at [81]; King v GIO Australia Holdings Ltd at [29]–[31] per Moore J; Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326 at [33] per Sackville J; Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2001] FCA 1073 at [7], [10] per Heerey J; Batten v Container Terminal Management Services Ltd [2001] FCA 1493 at [22] per Kiefel J; Bright v Femcare Ltd (2002) 195 ALR 574 at [25] per Lindgren J. [page 68] However, the issue was reconsidered by the Full Court in Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317. Carr J concluded (at [129]– [130]): In my view, such a course [ie not requiring the applicants and each group member to have a claim against each respondent] fits squarely with the language of s 33C(1) and at the same time satisfies the policy behind the introduction of Pt IVA. There are sufficient procedural safeguards in s 33C(1)(b) and (c) to protect the integrity of the court’s processes, ie that the claims arise out of the same, similar or related circumstances and give rise to a substantial common issue of law or fact.

Finkelstein J stated (at [248]): It seems to me that if Philip Morris be correctly decided, we are heading back in the direction of 1852. This result, so it seems to me, is so undesirable that it should be avoided at all costs unless, of course, parliament has mandated it in clear and unambiguous language. I am of the very firm view that there is nothing in the language of s 33C(1), when considered in isolation or in its setting, which requires that result.

Carr and Finkelstein JJ both held that the decision in Philip Morris was clearly wrong and should not be followed on that point: at [122], [130] per Carr J and [248] per Finkelstein J. 4.19 Following Bray, there were a number of contradictory decisions by single judges on this point. A number of cases held that Carr and Finkelstein JJ’s discussion in Bray was merely obiter and so they were not bound by it: see, for example, Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515; Kirby v Centro Properties Ltd (2010) 189 FCR 301. In McBride v Monzie Pty Ltd (2007) 164 FCR 559, Finkelstein J held that Bray had overruled Philip Morris and group members need not have claims against all respondents in the proceeding. However, in Pampered Paws Connection Pty Ltd (ACN 116 460 621) v Pets Paradise Franchising (Qld) Pty Ltd (ACN 054 406 272) [2008] FCA 1606, Mansfield J found that, for the purposes of the interlocutory application, it was at least a minimum requirement of s 33C(1)(a) that the representative party must have a claim against each of the respondents. Mansfield J declined to state with any precision whether the pleading must demonstrate a claim by each group member against each respondent, preferring to state that ‘it is arguable’: at [29]–[30].

Same, Similar or Related Circumstances 4.20 The words ‘in respect of, or arising out of’ are uncontroversial. However, the words ‘same, similar or related circumstances’ have received a far higher degree of judicial consideration. [page 69] Courts have noted that these words contemplate a three-tiered widening ambit of claims. The standard required relaxes from ‘sameness’ to ‘similar’ to ‘relatedness’. Accordingly, if group members share complaints consisting of the same or similar circumstances, then they should more easily be able to

fulfil the criteria established in s 33C(1) than when circumstances are merely related. When claimants’ circumstances are only related to each other, they are regarded as being on the ‘outer limits of eligibility’: see Zhang v Minister for Immigration (1993) 45 FCR 384 at 404–5 per French J. In those circumstances, the court makes a practical threshold judgment about whether the claims attract the operation of the Pt IVA regime. This ensures that the claims are not too tenuous or remote to attract the application of the legislation. In explaining how to determine whether claims were ‘related’, French J noted (at 404–5): In each case there is a threshold judgment on whether the similarities or relationships between circumstances giving rise to each claim are sufficient to merit their grouping as a representative proceeding. At the margins, these will be practical judgments informed by the policy and purpose of the legislation. At some point along the spectrum of possible class of claim, the relationship between the circumstances of each claim will be incapable of definition at a sufficient level of particularity, or too tenuous or remote to attract the application of the legislation.

4.21 When the link between parties operates at this ‘outer limit’, the courts will carefully analyse the facts to ensure that claims are indeed ‘related’. In doing so, courts will need to consider both the similarities and differences between claimants’ circumstances. In Philip Morris (Australia) Ltd v Nixon, Sackville J held that the specific circumstances of each instance of cigarette advertising and its effect on the group members needed to be related. In deciding that the claims were not related, his Honour considered relevant the diversity of representations and the period of time over which they were made. His Honour stated (at 523) that the Pt IVA representative procedure was: … plainly designed to accommodate a case where the applicants and group members rely on a series of related but not identical transactions, such as similar representations being made separately to different individuals … But this case involves vastly different forms of advertising, promotions and other public statements by the three respondents over four decades.

Sackville J’s decision was also influenced by the fact that a collective course of conduct had not been established (at 523–4): Once it is accepted that the case is founded on the separate conduct of each set of

respondents, the difficulty in concluding that s 33C(1)(b) is satisfied becomes apparent. The circumstances of each of the thousands of claims pleaded in the statement of claim are so disparate and involve such varied conduct on the part of the several respondents that they cannot be said to arise out of related circumstances.

[page 70] 4.22 In Guglielmin v Trescowthick (No 2), the court decided that claims were related because they referred to the same general misleading conduct of the respondent, even though they occurred at varying periods of time. Mansfield J cited with authority the decisions in Zhang and Philip Morris: at 525–6. However, his Honour departed from the conclusion in Philip Morris by holding that the group members in his case were related. Mansfield J concluded that the claims before him did arise out of ‘related circumstances’ despite the fact that the circumstances of individual group members differed, that is, members had claims arising at different times. His Honour concluded that what was clearly related in all the claims was the similar alleged conduct of the respondents in presenting a misleading picture about the financial health of the company.

Substantial Common Issue of Law or Fact 4.23 Section 33C(1)(c) provides that the claims of all group members (as identified by s 33C(1)(a)) should give rise to a ‘substantial common issue of law or fact’. There are two elements to be considered. First, the claims of group members must give rise to a common issue of law or fact. Second, they must show that the common issue(s) identified is (or are) ‘substantial’.

Common issue of law or fact 4.24 A ‘common question’ in a representative proceeding is not a question which arises in each group member’s case. It is a question which, when answered in the representative party’s case, also enables the court to answer that question for all group members. In any collation of claims, it is possible to articulate questions which arise

for determination in every claim. For example, in simple terms, the question ‘was a contract entered into between an applicant and respondent’ is a question which, as expressed, is ‘common’ in the sense that it arises in each claim. However, a question which arises in every claim does not make that question a ‘common’ question for the purposes of a representative proceeding. A Pt IVA ‘common question’ is one that, when answered in the representative party’s claim, can also perform the function of answering the question in the claims of each of the represented group members. Expressing a question which arises in each group member’s case does not make it a ‘common’ issue in the context of a Pt IVA proceeding. In Bright v Femcare Ltd (2002) 195 ALR 574 at [14], Lindgren J addressed the issue as follows: The failure of the pleading to comply with s 33H(1)(c) made the primary judge’s task difficult. Careful compliance with this requirement is of the greatest importance. Its purpose is to elicit the identity of questions, the answering of which in the representative party’s claim can be expected also to perform the

[page 71] useful purpose of answering them in the claims of the represented parties. In my opinion, the identification and formulation of the common issues calls for care and attention of the same kind as does the identification and formulation of a separate question for the purpose of O 29 r 2 of the rules.

See also Merck Sharpe & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26 at [7]–[9]. 4.25 Where an issue involves consideration of particular circumstances or characteristics of a group member then it will not be a ‘common issue’: see, for example, Murphy v Overton Investments Pty Ltd [1999] FCA 1673 at [14] per Emmett J; Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [89], [95] per Emmett J; and the observations of Kiefel J in Bright v Femcare Ltd at [145]. By way of example, questions of causation have almost inevitably been classed as individual: see, for example, Guglielmin v Trescowthick [2004] FCA 326 at [129]; Rod Investments (Vic) Pty Ltd v Clark [2006] VSC 342 at [52];

Bray v F Hoffman-La Roche Pty Ltd (2003) ATPR 41-906 at 46,513 per Merkel J. A ‘common question’ must also be one which enlivens a judiciable controversy in the representative party’s case. The representative nature of the proceedings does not permit the court to adjudicate hypothetical questions. If that is done, the court will be asked to reach beyond the judicial power which has been invoked under the Constitution and the Judiciary Act 1903 (Cth). See Femcare v Bright (2000) 100 FCR 331, where the Full Court noted (at [107]): Pt IVA is not to be construed as authorising the determination of a hypothetical question just because there may be difficulties, in any given proceeding, in determining whether there are indeed questions that are common to the claims of all group members.

4.26 The common issue identified by group members can be one of law or of fact. The group members need not identify a common cause of action against a respondent. It is sufficient that the representative party and group member claims give rise to a common factual issue. Courts do not take an overly legalistic approach when determining whether the group members have established a common issue or question: see Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR 41-679. Rather, s 33C(1)(c) has been construed in light of the intention of the legislation to achieve efficient court procedures and efficient outcomes. In Guglielmin v Trescowthick (No 2), Mansfield J said (at 521–2): I will not place a construction on s 33C which requires separate proceedings to be instituted. If it were impermissible to bring such an action, all the objectives of Pt IVA, the reduction of legal costs, the enhancement of access by individuals to legal remedies, the promotion of the efficient use of court resources, ensuring consistency in the determination of common issues, and making the law more enforceable and effective, would be undermined.

[page 72] Accordingly, there is no requirement that the group members’ claims be identical for there to be a common issue of law or fact: see TMAC Pty Ltd (t/as Northstar Property Services) v Thomas Ford Training Pty Ltd (t/as Fresh Telecoms) [2010] FCA 445. In Green v Barzen Pty Ltd [2008] FCA 920 at

[13], Finkelstein J held that a common question may exist even if the individual circumstances of the group members vary (and as much is made clear by s 33C(2)): … it will be enough if there is at least a common nucleus of operative facts and legal issues. It will also suffice if what is alleged in substance amounts to a common course of conduct directed towards a particular group.

4.27 In Guglielmin v Trescowthick (No 2) at [66]–[68], Mansfield J considered whether s 33C(1)(c) of the Act was satisfied. His Honour found that s 33C(1)(c) was satisfied, stating that: It is correct that the circumstances of each individual group member will differ. Claims may exist in respect of conduct against some only of the respondents. However, I have concluded that in any event each group member has a claim against each respondent. Each of those claims will involve different considerations of reliance and loss, simply because each claim group member may have different circumstances. Nevertheless, in my view, there is shown to be commonality in those issues of fact and law to which I have referred, and they will arise in respect of the claims of each group member against each respondent … Individual circumstances may of course differ; it will be a matter of evidence as to whether a particular person in fact relied upon a particular representation. But the description of the claim group posits such reliance. Those issues also are, in my judgment, substantial common issues of law and fact of which will arise in the proceedings.

4.28 The common question of law or fact relied upon should be specified in the pleadings: Bright v Femcare Ltd (2002) 195 ALR 574. In .Au Domain Administration Ltd v Domain Names Australia Pty Ltd at 129, Finkelstein J noted the intersection between s 33H and s 33C(1)(c): Provided s 33H has been complied with, it should not be necessary to go behind the form of the application or the document filed in support of the application (the document will be either a statement of claim or an affidavit) to determine whether the claims of the group members arise out of the same, similar or related circumstances (s 33C(1)(b)) or whether the claims give rise to a substantial common issue of law or fact (s 33C(1)(c)). The information which is required to be given pursuant to s 33H will show whether these criteria have been met.

The extent of commonality and representative nature of proceedings 4.29

In Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance

Pty Ltd (in liq) v Tomes (2016) 339 ALR 11, the High Court described the extent of the [page 73] representative nature of proceedings which have been commenced in compliance with s 33C (at [103]): … the effect of those [s 33C] conditions is that the proceeding can only be representative to the extent of the commonality.

In this proceeding, Timbercorp Finance unsuccessfully argued that the lead plaintiff’s representation of group members extended beyond the common questions within the proceeding. The High Court rejected this, holding that the representative party only represented group members in respect to claims the subject of common issues, and not in respect of issues which only arise in respect of individual claims. On this basis, group members were free to raise individual claims and defences in subsequent proceedings against the same defendant, provided there was no significant connection between these defences and the previous representative proceeding.

Issue must be substantial 4.30 It is not enough that the group members identify that their claims give rise to a common issue of fact or law. That issue must be substantial. While earlier decisions suggested that this qualifier demonstrated a parliamentary intention to restrict the availability of the Pt IVA procedure (see Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723 at 731 per Drummond J), the High Court clarified the meaning of the term in the seminal decision of Wong v Silkfield (1999) 199 CLR 255 at [27]–[28]: The term ‘substantial’ may have various shades of meaning. Having regard to the context, it may mean ‘large or weighty’ or ‘real or of substance as distinct from ephemeral or nominal’. Clearly, the purpose of the enactment of Pt IVA was not to narrow access to the new form of representative proceedings beyond that which applied under regimes considered in cases such as Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398. This suggests that, when used to identify the threshold requirements of s 33C(1), ‘substantial’ does not indicate that which

is ‘large’ or ‘of special significance’ or would ‘have a major impact on the … litigation’ but, rather, is directed to issues which are ‘real or of substance’.

To be ‘substantial’, the issue does not need to be one that is a significant or core issue in the case: see, for example, Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd [2011] FCA 106. The court should be satisfied that ‘a significant question common to all members of the class’ exists: Guglielmin v Trescowthick (No 2) at [55]–[60] per Mansfield J. This does not necessarily mean that the mere existence of a common issue that cannot be dismissed as ‘trivial or insubstantial’ will necessarily be a substantial common issue: Connell v Nevada Financial Group Pty Ltd at 732. Ultimately, this is a question of fact to be determined by the court in the circumstances: Guglielmin v Trescowthick (No 2). [page 74]

Some or All of Them 4.31 The remaining words of s 33C(1) state that ‘a proceeding may be commenced by one or more of those persons as representing some or all of them’. Unlike the discussion above, this is not a threshold element. Practically speaking, this has the effect that the representative party does not need to sue on behalf of all affected persons, but rather simply ‘some’ of them. It has been held that the words ‘as representing some or all of them’ show an intention that there is to be no right of complaint merely because some of the representatives that fall within subparas (a), (b) and (c) of the section have been omitted from the group as defined: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 at 279. However, this does not mean that multiple proceedings can be instituted where one proceeding including all relevant representatives would suffice. The matters may be consolidated or heard together or one stayed: Kirby v Centro Properties Ltd (2008) 253 ALR 65; [2008] FCA 1505 at [9]–[10]. It is only when significantly different issues of law or fact arise, or the interests of

justice require it, that separate proceedings will be heard: Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 56 at [66], [68]. In City of Swan v McGraw-Hill Financial Inc (2014) 223 FCR 328 Rares J held (at [9]): At the time proceedings under Part IVA are commenced, the group must be identified in accordance with s 33C as, in effect, a closed class from whose membership individuals can opt out but to which none can be added i.e. none can opt in.

An exception to this principle nevertheless arose within these proceedings, when the applicants sought to amend their originating application and statement of claim, to change the description of group members. This change would allow some group members to ‘opt in’ after the commencement of the proceedings, which the respondents argued was impermissible. Rares J held that such an amendment was in fact permissible under Pt IVA, assuming that it (at 13): … closes the newly described class or identifies an already closed class in the same way as occurs when proceedings under Part IVA initially are commenced.

Proceedings Commenced 4.32 While s 33C(1) places some minimalist constraint on the ability to commence a representative proceeding, s 33C(2) specifies certain matters which cannot be used to reject the commencement of a claim. It therefore broadens the potential application of Pt IVA. According to the High Court in Wong v Silkfield Pty Ltd, s 33C(2) was created to resolve the historical issues which had ‘bedevilled’ representative procedures as they had been developed, particularly by courts of equity. Because of s 33C(2), claims must not be dismissed because of particularities in the relief sought or because [page 75] separate transactions, acts or omissions were alleged against the

respondent(s). Rather, the main determination was whether claims gave rise to a common issue of law or fact which was ‘substantial’: at 261. 4.33 This balance between s 33C(1) and (2) was aptly described by Moore J in King v GIO Australia Holdings at [30]: There is a clear requirement in s 33C(1)(a) that the group members must have, if there is one respondent, a claim against that respondent. That is, each member must have a claim against that respondent. However, it is equally clear that the claim, for the purposes of s 33C(1)(a), need not result in the same relief (s 33C(2)(a)(iv)), need not be based on the same conduct of the respondent (s 33C(2)(b)(ii)) and may arise out of different transactions with the respondent (s 33C(2)(b)(i)). What the claims must have as unifying characteristics to permit their prosecution under Pt IVA is that they are founded in the same, similar or related circumstances (s 33C(1)(b)) and give rise to a substantial common issue. The common issue can be either of fact or law (s 33C(1)(c)).

See also the comments of Mansfield J in Guglielmin v Trescowthick (No 2) at [31]: The similarity and commonality of the claims are factors considered in paras (b) and (c) of s 33C(1). Section 33C spells out that the claims need not result in the same relief for each group member: s 33C(2)(a)(iv). Nor need the claims be based on the same conduct of the respondent: s 33C(2)(b)(ii). They may arise out of different transactions with the respondent: s 33C(2)(b)(i). It can therefore be said that claims which are not exactly the same against each respondent, or that do not seek exactly the same outcome against each respondent, may still come within the parameters of s 33C(1)(a).

Equitable Relief 4.34 Section 33C(2)(a)(i) states that a representative proceeding may be commenced whether or not the relief sought is, or includes, equitable relief: see Kirby v Centro Properties Ltd [2010] FCA 1115 at [49]: That much is made clear by s 33C(2)(a)(i) which allows the relief sought in a representative proceeding to consist of, or include, ‘equitable relief’.

Damages 4.35 Section 33C(2)(a)(ii) provides that a representative proceeding can be commenced whether or not the relief sought consists of, or includes, damages: see Bray v F Hoffman-La Roche Ltd [2002] FCA 1405 at [41] per Merkel J.

Individual Assessment 4.36 Section 33C(2)(a)(iii) allows for representative proceedings to be commenced even if claims for damages would require individual assessment. This [page 76] was affirmed by Mansfield J in Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 3) [2009] FCA 138 at [102]: Section 33C(2) makes it clear that a representative proceeding may be commenced even if the claims for damages would require individual assessment, or if the relief claimed for each person represented is not the same, and whether or not the proceeding is concerned with separate contracts or transactions between the respondent and the individual group members, or involves separate acts or omissions of the respondent in relation to individual group members.

Same or Different Relief 4.37 Section 33C(2)(a)(iv) makes it clear that a representative proceeding can still be commenced even if the relief sought is not the same for each person represented. In Australian Competition and Consumer Commission (ACCC) v Golden Sphere International (1998) 83 FCR 424, O’Loughlin J noted that because of s 33C(2)(a)(iv), there was no need to establish ‘commonality’ in relief (at 446): The claim that there is a need to establish what has been described as some measure of ‘commonality’ does not stand up when one reflects upon the language of the FCA Act and s 33C(2)(a)(iv) in particular; that is the provision that expressly states that a representative proceeding may be commenced whether or not the relief sought is the same for each person …

O’Loughlin J then demonstrated why the group members before him (which included the ACCC) could be classed together even though they sought different forms of relief. According to his Honour (at 446–7), each group member shared a common interest in demonstrating that the respondent had breached the Trade Practices Act 1974 (Cth):

In my opinion, the correct way to test the matter is to examine the separate material of each claim that is intended to be included in the representative proceedings. In the present case that examination would show that the nature of ACCC’s claim differs from the claims of the intended group members but only in respect of the nature of the relief sought. Each intended member of the group and the ACCC would, on the other hand, be intent on proving a breach of s 61(2A) of the TPA and the individual facts that made up the commission of the breach. Those facts, although differing from participant to participant in some details … would nevertheless establish a consistent pattern whereby an existing participant in the Golden Sphere scheme would induce a target to pay over his or her three payments of A$50 and thereafter Golden Sphere would send or cause to be sent to that target three Certificates and the brochure. Although the names of the parties and the dates of the transaction would differ, the pattern would, otherwise, be the same. The establishment of that pattern and individual facts that related to various targets would entitle the ACCC to

[page 77] move the Court for injunctive relief; the establishment of those factors would also entitle individual targets to their respective — but different — relief. So expressed, one can see that there is a strong link in the respective positions of the ACCC and the group members. In that sense it can be said that there is a common interest pervading the claims of the ACCC and the group members but that common interest does not and need not extend to the relief that is sought.

Separate Claims 4.38 Section 33C(2)(b) provides that a representative proceeding can be commenced even if it: concerns separate contracts or transactions between the respondent in the proceeding and individual group members; or involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members. If group members fulfil the criteria established in s 33C(1), they are able to pursue individual claims in representative proceedings. In Richards v Macquarie Bank Ltd [2011] FCA 1085, Reeves J cited 33(2)(b) and noted (at [5]–[6]): My reasons for this decision, in brief summary form, are as follows. Dealing with the three issues raised in the submissions, first, on the individual claims issued, I consider the applicant

is entitled to add what Mr Kelly refers to as ‘a collection of idiosyncratic individual claims’ to these proceedings. There is nothing in Pt IVA of the Federal Court of Australia Act 1976 (Cth) (‘the Act’) that prevents a representative applicant pursuing personal claims in representative proceedings. To the contrary, I consider the text of the relevant provisions, and the context of other provisions in that part, indicate to the contrary. In particular, I refer to s 33C(2)(b), which refers to separate contracts, transactions, acts or omissions involving individual group members; s 33Q, which refers to subgroup claims; and s 33R, which refers to claims by an individual group member. All of these references suggest to me that individual or personal claims can be pursued in representative proceedings under Pt IVA of that Act.

• CASE LAW • 4.39

Zhang v Minister for Immigration (1993) 45 FCR 384; 118 ALR 165 (French J)

One of the first decisions to analyse the meaning of s 33C(1)(b) was Zhang. French J decided that claimants whose refugee applications had been refused on review constituted a group of persons whose circumstances were sufficiently related to warrant the use of the procedure under Pt IVA. [page 78] In coming to this decision, his Honour noted that the words ‘same’, ‘similar’ and ‘related’ contemplated relationships of widening ambit. French J stated (at 404–5): The question whether the claims of the persons who are proposed as members of a group arise out of ‘the same, similar or related circumstances’ as required by s 33C(1) is not to be answered by an elaboration of that verbal formula. It contemplates a relationship between the circumstances of each claimant and specifies three sufficient relationships of widening ambit. Each claim is based on a set of facts which may include acts, omissions, contracts, transactions and other events. As appears from s 33C(2), the circumstances giving rise to claims by potential group members do not fall outside the scope of the legislation simply because they involve separate contracts or transactions between individual group members and the respondent or involve separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

The outer limits of eligibility for participation in representative proceedings are defined by reference to claims in respect of or arising out of related circumstances. The word ‘related’ suggests a connection wider than identity or similarity. In each case there is a threshold judgment on whether the similarities or relationships between circumstances giving rise to each claim are sufficient to merit their grouping as a representative proceeding. At the margins, these will be practical judgments informed by the policy and purpose of the legislation. At some point along the spectrum of possible classes of claim, the relationship between the circumstances of each claim will be incapable of definition at a sufficient level of particularity, or too tenuous or remote to attract the application of the legislation. In the present case, the relationship between the circumstances of each group member is defined by a few common integers which leaves room for considerable diversity in circumstances which might support individual claims to set aside the review decisions. Some applicants may have complaints about aspects of the decision-making process which have nothing to do with the question whether or not they should be afforded an oral hearing. There may be applicants who are able to show that even if there is no common entitlement to the opportunity of an oral hearing, the particular circumstances of their cases require such a hearing as a matter of natural justice. Notwithstanding that possibility, I am satisfied that the claims of the members of the group as defined in the present application are connected by circumstances sufficiently related to warrant the use of the procedure under Pt IVa for the determination of the common issue of law defined in the application. In so holding, I have regard to the need for a purposive approach to the construction of s 33C(1)(b), bearing in mind the utility of determining the common issue in this way. If the application were to succeed, all group members would be entitled to the offer of an oral hearing by the decisionmaker. In that event, other aspects of individual claims to which I have referred might not be pursued. If the application fails, then a principle applicable to each group member would be established, namely that there is no entitlement in any member of the group to

[page 79] an oral hearing by reason only of the fact that the member is an applicant for administrative review of the refusal to grant refugee status.

4.40

King v GIO Australia Holdings Ltd (2000) 100 FCR 209; 174 ALR 715; [2000] FCA 617 (Moore J)

The representative party, Mr Shane King, brought proceedings on his own behalf and on behalf of certain shareholders in GIO Australia Holdings Ltd (GIO) against GIO, an adviser to GIO, Grant Samuel and Associates Pty Ltd, and nine directors of GIO (together the respondents). The respondents

applied to strike out the action on the basis that it was not a properly constituted ‘representative proceeding’ within the meaning of s 33C. Moore J held (at [13], [29], [30]), dismissing the applications, that for a proceeding to be brought as a representative proceeding under Pt IVA of the Act, each applicant and every member of the representative group must have a claim against each respondent. The claims of the applicants and group members must have sufficient in common to satisfy the requirements of the Act; however, it does not follow that each must pursue the same claim against each respondent: at [30]. In order to permit their prosecution as part of a representative proceeding, the various claims of group members need not result in the same relief or be based on the same conduct or arise out of the same transactions, provided that those claims are founded in the same, similar or related circumstances and give rise to a substantial common issue of either fact or law: at [30].

4.41

Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229 (Spender, Hill and Sackville JJ)

Representative proceedings were brought by the applicants on behalf of persons who were said to have suffered damage to their health caused by cigarette smoking due to being influenced by the conduct of a number of companies that manufactured or distributed cigarettes (the respondents) to begin or continue smoking the respondents’ cigarettes. The applicants conceded that each group member must have a claim against each respondent in order to satisfy the requirements of s 33C(1)(a). The parties and the court therefore proceeded on the assumption that each group member was required to have a claim against each respondent. Sackville J considered the issue in his judgment and stated (at [126]–[127]): [A]s the parties accepted, s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. This conclusion follows from the language of s 33C(1)(a) itself and is consistent with the approach taken by the LRC in

[page 80] Grouped Proceedings (Law Reform Commission, Grouped Proceedings in the Federal Court (Report No 46, 1988), which led to the introduction of Pt IVA of the Federal Court of Australia Act 1976 (Cth)). It is also consistent with the structure of the legislation. It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents). The requirements in s 33C(1)(b), that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings. Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together: Ryan v Great Lakes Council (1997) 149 ALR 45 at 48, per Wilcox J. But they cannot both be the subject of the same representative proceedings.

4.42 Another issue in this case related to s 33C(1)(b). Sackville and Spender JJ considered that the diversity of representations (advertising, promotion, lobbying and other public statements about numerous brands and varieties of cigarettes) and the long period of time over which they were made (four decades) meant that they could not be described as arising out of the same, similar or related circumstances, as required by s 33C(1)(b). Hill J did not discuss s 33C(1)(b), but agreed with the reasons of their Honours. Sackville J held that the specific circumstances of each instance of cigarette advertising and its effect on the group members needed to be related. In deciding that the claims were not related, his Honour considered relevant the diversity of representations and the period of time over which they were made. His Honour stated (at [165]) that the Pt IVA representative procedure was: … plainly designed to accommodate a case where the applicants and group members rely on a series of related but not identical transactions, such as similar representations being made separately to different individuals … But this case involves vastly different forms of advertising, promotions and other public statements by the three respondents over four decades.

Sackville J’s decision was also influenced by the fact that a collective course of conduct had not been established (at [166]):

Once it is accepted that the case is founded on the separate conduct of each set of respondents, the difficulty in concluding that s 33C(1)(b) is satisfied becomes apparent. The circumstances of each of the thousands of claims pleaded in the statement of claim are so disparate and involve such varied conduct on the part of the several respondents that they cannot be said to arise out of related circumstances.

4.43 Spender J also considered the diversity of representations and the period of time over which they were made to be relevant to a consideration of whether [page 81] the circumstances were ‘similar or related’ within the meaning of s 33C(1) (b). His Honour considered that it would be necessary to consider the different circumstances of each claim, involving different parts of each respondent’s conduct. He stated (at [7]): Disparate claims of deception caused by different statements are not properly to be described as arising out of the same, similar or related circumstances, in my opinion.

His Honour further illustrated the principle with the following hypothetical examples (at [8]–[9]): [S]uppose one company, Widget Retailing Ltd (Widget) has distributed its goods by road throughout Australia over four decades. Suppose further that various individual members of the public were injured by the negligent driving of different employees of Widget, as follows: A in Melbourne in 1960; B in Townsville in 1974; C in Sydney in 1984; and … Z in Perth in 1996. Claims for damages by each injured individual against Widget, in my opinion, would not properly be described as claims arising out of the same, similar or related circumstances. That is so, even if it be the position that on each occasion the negligence consisted of, say, driving at an excessive speed. In my opinion, a representative proceeding against Widget could not properly be brought under Pt IVA of the Act, on those assumed facts. The ALRC reports (which led to the introduction of Pt IVA) do not suggest that it was intended that such disparate claims could properly be brought in representative proceedings. Closer to the present case, if each of A, B, C … and Z had suffered loss or damage in reliance on a particular deceptive advertisement by Widget at the times and places posed, with the advertisements in each case being different (including, for instance, advertising different products), but each one being part of Widget’s campaign over the years to persuade people to buy its products, again the claims, in my opinion, would not arise out of ‘the same, similar or related circumstances’, within the proper meaning of those words in s 33C(1)(b) of the Act.

4.44

Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317; 200 ALR 607; [2003] FCAFC 153 (Carr, Branson and Finkelstein JJ)

In contrast to Philip Morris, the respondents submitted that the requirement in s 33C(1)(a) can only be satisfied if each group member possesses an independent and personal cause of action against each respondent. Carr and Finkelstein JJ considered that Philip Morris was clearly wrong while Branson J held that it expressed a view which was open and so should be followed until High Court authority says otherwise; however, it was decided that the original judge’s decision declining to discontinue the proceeding as a representative proceeding would not be overturned. [page 82] Carr J turned his mind to whether Philip Morris was correctly decided on the point that the representative party and group members must have a claim against all respondents. His Honour noted that the first instance decision in Philip Morris was based on a misunderstanding of the decision in Symington v Hoechst Schering Agrevo Pty Ltd — that case was not authority for the proposition that the representative party and each group member must have a claim against each respondent. Rather, in that case, the applicants conceded that they did not have standing to sue six out of the seven respondents and Wilcox J found that as there was more than one respondent, the applicants had to have standing to sue them all. Carr J concluded (at [129]–[130]): In my view, such a course [ie not requiring the applicants and each group member to have a claim against each respondent] fits squarely with the language of s 33C(1) and at the same time satisfies the policy behind the introduction of Pt IVA. There are sufficient procedural safeguards in s 33C(1)(b) and (c) to protect the integrity of the court’s processes, ie that the claims arise out of the same, similar or related circumstances and give rise to a substantial common issue of law or fact….

Finkelstein J stated (at [248]):

It seems to me that if Philip Morris be correctly decided, we are heading back in the direction of 1852. This result, so it seems to me, is so undesirable that it should be avoided at all costs unless, of course, parliament has mandated it in clear and unambiguous language. I am of the very firm view that there is nothing in the language of s 33C(1), when considered in isolation or in its setting, which requires that result. … It can immediately be acknowledged that a properly constituted representative proceeding must involve a group of seven or more persons each of whom has a claim or claims against one person. But that is all the section requires. It simply does not address the situation where some members of the group, say 10 out of a group of 15, also have claims (that is, causes of action) against some other person, being causes of action which satisfy both s 33C(1)(b) (each claim arises out of the same circumstances) and s 33C(1)(c) (each claim gives rise to common issues of law or fact). Is it necessary for the claims of this smaller group to be prosecuted in a separate proceeding or can they be joined in the proceeding brought by the larger group? I will not place a construction on s 33C which requires separate proceedings to be instituted. If it were impermissible to bring such an action, all the objectives of Pt IVA, the reduction of legal costs, the enhancement of access by individuals to legal remedies, the promotion of the efficient use of court resources, ensuring consistency in the determination of common issues, and making the law more enforceable and effective, would be undermined.

[page 83]

4.45

Guglielmin v Trescowthick (2005) 220 ALR 515; [2005] FCA 138 (Mansfield J)

In Guglielmin, the representative party represented 3191 group members, who claimed damages from each of the respondents arising from alleged misleading conduct in relation to the true value of shares. Mansfield J cited with authority the decisions in Zhang and Philip Morris: at 525–6. However, his Honour departed from the conclusion in Philip Morris by holding that the group members in his case were related. In making this decision, Mansfield J made it clear that consideration needed to be given to both the similarities and differences of claims (at 525– 6): … I think it would be erroneous to focus only on the similarities in the claims of group members

without regard to the differences in their claims and the complexity of their claims. Part IVA indicates the circumstances in which a representative action may be commenced, and its provisions must be applied. Nevertheless, as French J said in Zhang, the application of those provisions may involve ‘practical judgments informed by the policy and purpose of the legislation’. The policy and purpose of Pt IVA of the Act is, in my view, reflected in the second reading speech … [Emphasis added] … In any representative proceeding there may well be differences between the positions of the various group members in respect of their claims against the respondents. That is likely to be the case whenever a complex representative action is instituted, that is a representative action involving a course of conduct rather than one transaction or piece of conduct or a representative action involving a large number of respondents. With an active mind, one could find a plethora of differences in any such representative proceeding. It is the nature of such proceedings that there are differences between the positions of the parties. That is why there is needed a relatedness of circumstances, rather than exactly the same circumstances, in the claims of the group members. Representative proceedings are not intended only to be available in the more straightforward of circumstances where the conduct of one respondent on one occasion is alleged to have resulted in loss to a number of persons. [Emphasis added]

Mansfield J concluded that the claims before him did arise out of ‘related circumstances’ despite the fact that the circumstances of individual group members differed, that is, members had claims arising at different times. His Honour dismissed this because in his view, what was clearly related in all the claims was the similar alleged conduct of the respondents in presenting a misleading picture about the financial health of the company. [page 84]

4.46

Tropical Shine Holdings v Lake Gesture (1993) 45 FCR 457; 118 ALR 510 (Wilcox J)

In Tropical Shine Holdings v Lake Gesture, representative proceedings were commenced by a competitor furniture importer and distributor on its own behalf and on the behalf of customers who purchased furniture at so-called ‘liquidation sales’ convened by the respondent. The applicant claimed that group members purchased furniture in reliance on false statements made in

the respondent’s advertisements and sought damages in respect of the loss occasioned by this. The respondent contended that the representative proceeding was not properly commenced in that it did not comply with s 33C. The respondent contended that it had not been shown that seven or more persons suffered loss or damage. 4.47 Wilcox J considered the meaning of s 33C and in particular whether s 33C(1)(a) required the termination of proceedings where fewer than seven persons were found to have claims (at 462): But for one consideration, a possible approach to s. 33C(1)(a) would be to say that it was intended to ensure termination of a representative proceeding where there were found to be less than seven persons with claims. This would be a drastic course, often productive of injustice and inconvenience; and it would conflict with the policy expressed by s. 51 of the Federal Court of Australia Act that proceedings are not invalidated by a formal defect or irregularity unless the Court thinks substantial and irremediable injustice has occurred. Nevertheless, it would provide a role for para. (a). On this approach, although the number of group members need not be specified in the legislation (s. 33H(2)), s. 33C(1)(a) would protect respondents from having to deal with group proceedings involving few group members. However, this possible explanation cannot survive consideration of s. 33L. That provision not only enables the Court to order that a proceeding with less than seven group members not continue under Part IVA; it enables the Court to allow it to continue — a provision inconsistent with the notion that s. 33C(1)(a) requires automatic termination of a proceeding with less than seven claimants. I think the only way of making sense of s. 33C(1)(a) is to interpret it as restricting the use of Part IVA to claims that, by their nature and assuming that they have substance, are shared by at least seven persons. I use the word ‘shared’ in the sense explained by paras. (b) and (c); that is, that the claims of all the persons are in respect of, or arise out of, the same, similar or related circumstances and give rise to a substantial common issue of law or fact. Interpreted in this way, the paragraph fulfils the function of weeding out cases that should clearly not be brought as representative proceedings because it is obvious that less than seven people share the claim, whilst preserving the principle embodied in s. 33H.

[page 85] In applying the above approach to the facts before the court, Wilcox J stated (at 462): … it cannot be said that it was impermissible to commence under Part IVA a proceeding on behalf of persons who bought furniture at the sales conducted by Federation Furniture

Company. People who read the newspaper advertisements published by Federation Furniture Company have claims against the respondents if they can prove that the advertisements contained false information, that they relied upon that information and that they thereby sustained a loss. Any such claims would arise out of the same, similar or related circumstances and give rise to at least one substantial common issue of fact; namely, the falsity of the material published in the advertisements.

4.48

Wong v Silkfield Pty Ltd (1999) 199 CLR 255; 165 ALR 373; [1999] HCA 48 (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ)

The representative party in Wong v Silkfield appealed against a decision by the Full Federal Court to discontinue the representative proceeding on the basis that the action did not give rise to a ‘substantial common issue of law’ within the meaning of s 33C. The key issue for consideration by the High Court was the meaning of s 33C(1)(c), specifically, whether the common issue must have a ‘major impact’ on the litigation in order to be considered ‘substantial’: at 260. The High Court approved the decision in Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 and held that the term ‘substantial’ in s 33C(1)(c) does not indicate a ‘special significance’ but rather issues that are ‘real or of substance’ (at 266–7): The term ‘substantial’ may have various shades of meaning. Having regard to the context, it may mean ‘large or weighty’ or ‘real or of substance as distinct from ephemeral or nominal’. Some assistance for the present case may be derived from authorities construing provisions in the form of that rule considered in Carnie. This rule provided for the commencement of proceedings by numerous persons having ‘the same interest in any proceeding’. In Carnie, Mason CJ, Deane and Dawson JJ expressed the view that to equate the meaning of the phrase ‘same interest’ with a common ingredient in the cause of action by each member of the class might not adequately reflect the content of the statutory expression. Their Honours said that the expression may extend ‘to a significant common interest in the resolution of any question of law or fact arising in the relevant proceedings’. Brennan J and McHugh J were of opinion that a plaintiff and the represented persons had ‘the same interest’ when they had a community of interest ‘in the determination of any substantial question of law or fact that arises in the proceedings’. Toohey and Gaudron JJ treated as sufficient ‘a significant question common to all members of the class’, to be determined by the grant of declaratory relief.

[page 86] Clearly, the purpose of the enactment of Pt IVA was not to narrow access to the new form of representative proceedings beyond that which applied under regimes considered in cases such as Carnie. This suggests that, when used to identify the threshold requirements of s 33C(1), ‘substantial’ does not indicate that which is ‘large’ or ‘of special significance’ or would ‘have a major impact on the … litigation’ but, rather, is directed to issues which are ‘real or of substance’.

4.49

Cash Converters International Ltd v Gray (2014) 223 FCR 139; 314 ALR 154; [2014] FCAFC 111 (Jacobson, Middleton and Gordon JJ)

Ms Gray commenced two class actions related to the provision of consumer credit by Cash Converters franchises through ‘personal loan’ and ‘cash advance’ contracts. The respondents were alleged to have engaged in unconscionable conduct in contravention of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) and the interest/fees charged in the credit contracts and cash advance contracts were in contravention of the Credit (Commonwealth Powers) Act 2010 (NSW), which caps the maximum annual interest rate on consumer credit contracts. In the personal loan proceedings, Ms Gray obtained personal loans from both Safrock Finance Corporation (Qld) Pty Ltd and Cash Converters Personal Finance Pty Ltd but the members of the class in that proceeding obtained finance from one or the other but never both. A claim of accessorial liability was also made against Cash Converters International Pty Ltd, the parent company of the other Cash Converter entities, by all class members. The same representative, this time in proceedings for the cash advance contracts, received credit from only one Cash Converters franchise, Ja-Ke Holdings Pty Ltd, whereas the majority of class members received credit from different franchisees who were not parties to the proceedings. The representative and the class members also made claims for accessorial liability against the same respondents, Cash Converters Pty Ltd and Cash Converters International Pty Ltd.

The fundamental question before the court was whether s 33C(1) meant that each group member within the proceeding had to have a claim against each respondent. The respondents argued that the court was bound to follow Philip Morris (Australia) Ltd v Nixon, and therefore all group members had to have a claim against every respondent. They maintained that the trial judge was incorrect in following the subsequent decision of Bray v F Hoffman-La Roche Ltd, and that the ‘ordinary and natural meaning of the statute’, in addition to other sections of Pt IVA and extrinsic materials, supported this interpretation. The court held that s 33C(1)(a) simply did not address this issue, and therefore there was nothing to prevent an applicant from joining other [page 87] respondents in respect of whom some group members have claims and some do not. The court further determined that it was not bound to follow Philip Morris as (at [28]): … the specific issue raised in these proceedings was not in issue in Philip Morris because it was not in dispute. If a point is not in dispute in a case, then the decision lays down no legal rule concerning that decision.

The interpretation of the statutory text applied in Bray v F Hoffman-La Roche, in addition to the context in which s 33C operated, supported the notion that a claim against all respondents was not required. On this basis, the court agreed with the reasoning applied in Bray v F Hoffman-La Roche, and held that not every group member needed to have a claim against all respondents. Therefore, both proceedings in question had been properly initiated.

4.50

City of Swan v McGraw-Hill Financial Inc [2014] FCA 931 (Rares J)

In City of Swan v McGraw-Hill, the applicants sought to amend their originating application and statement of claim to add a third applicant,

Baron-Hay Investments, and to change the description of the group members, to include those who ‘after the commencement of these proceedings but prior to the date of filing the Amended Statement of Claim, entered into a litigation funding agreement with IMF … in the circumstances pleaded in paragraphs 9.1 and 9.2 above’. The respondents did not oppose the addition of the third applicant; however, they argued that the proposed amendment of the group description after the commencement of the proceedings was impermissible, as it allowed group members to ‘opt in’ to the proceedings post-commencement. The respondents argued that this was inconsistent with Pt IVA, and that a similar amendment had already been considered and refused in Watson v AWB Ltd [2009] FCA 215. Rares J acknowledged that (at 9): At the time proceedings under Pt IVA are commenced, the group must be identified in accordance with s 33C as, in effect, a closed class from whose membership individuals can opt out but to which none can be added: i.e. none can opt in … The Parliament intended that representative proceedings under Pt IVA be commenced on behalf of a defined group of persons whose membership was certain, even though it was not necessary that every member be able to be named, so long as the pleading contained a precise description in compliance with ss 33C and 33H, that enabled each such member of the group to be identified as having or meeting those characteristics at the date of the commencement of the proceedings.

[page 88] However, Rares J stated that this instance differed from Watson v AWB Ltd, on the basis that ‘Foster J did not have his attention directed to, and did not analyse, the terms of s 33K’: at 7. In relation to s 33K specifically, Rares J noted that (at 11): First, the Court is given a broad discretion in s 33K(1) to grant leave to amend the originating application, at any stage of a representative proceeding, ‘so as to alter the description of the group’. Secondly, s 33K(4) recognises that, when that is done, the new description can expand the membership of the group for the section says, in terms, that ‘persons who, as a result of the amendment, will be included in the group’, can be the subject of orders relating to their being given notice of their right to opt out of the group. That could only occur because s 33K permitted the additional persons to whom such a notice could be

given to have been included in the group, not originally, but only as a consequence of the amendment.

On this basis, Rares J determined that the provisions of s 33K permitted the amendment in question, assuming that the amendment (at 13): … closes the newly described class or identifies an already closed class in the same way as occurs when proceedings under Pt IVA initially are commenced.

The applicants had also requested further time to amend the originating application, to allow those persons contemplating entering the litigation funding agreement to do so. Rares J refused this request, as (at 15–16): To allow that delay would be the very kind of action described in the authorities as permitting people to opt in. Those persons would know that the Court had ordered that the description of the group members may be changed on a future date and would thus be given the option of deciding whether or not they now wish to join.

In this regard, such an amendment will only be permissible if the class will be closed as soon as the amendment application is allowed.

4.51

Gibson v Malaysian Airline Systems Berhad [2016] FCA 1476 (Perram J)

Representative proceedings were commenced by the applicant on behalf of deceased passengers following the MH17 aircraft disaster in Ukraine. The claim for compensation in the proceedings was made under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth). Therefore, the liability of the respondents was governed by the Convention for the Unification of Certain Rules for International Carriage by Air done at Montreal on 28 May 1999 (‘the Montreal Convention’). This Convention provides that a carrier can be deemed liable for the death of a passenger. [page 89] In this case, the group members included: 1.

Residents of Australia who are legal representatives of a passenger who

2.

was killed on MH17; or If not a resident of Australia, legal representatives of a passenger killed on MH17 and who express the desire to take the benefit of the action per Civil Aviation (Carriers’ Liability) Act 1959 (Cth) s 9D(6)(B).

The respondents argued that the way in which the applicant defined the group members resulted in the claim failing to fall within the jurisdiction of the Montreal Convention. Perram J explained that Art 33 of the Montreal Convention outlined five different jurisdictions in which a claim for a deceased passenger may be commenced. Those jurisdictions were (at 16): (a) the State where the carrier is domiciled; (b) the State where the carrier has its principal place of business; (c) the State where the carrier has a place of business through which the contract of carriage was made; (d) the State which is the place of destination; and (e) the State where the passenger had his or her principal and permanent residence at the time of the accident and to or from which the carrier operated services on its own or using another carrier’s aircraft by commercial agreement and from which the carrier conducts its business of carriage of passengers from premises leased or owned by the carrier (or other carrier).

The court held that, as the applicant commenced her own claim as the legal representative of a deceased passenger whose ‘place of destination’ was to be Australia, this fell within the jurisdiction of Art 33. However, the remaining class members included in the group definition did not appear to have a ‘necessary connexion with Art 33’ (at 18), as the definition contained no allegation linking those deceased passengers to Australia. Perram J noted (at [19]): Paragraph 7(a), it is true, refers to the Australian residency of the legal representatives, but this is not what Art. 33 operates upon. It is concerned with the residency of the deceased passenger, not the residency of the passenger’s legal representative.

As the residency of the deceased passengers was not included within the group definition, it was held that (at [9]): … the Applicant’s pleading of her class definition gives rise to claims which are not cognisable under the Montreal Convention by this Court.

[page 90] Therefore, the court did not have jurisdiction over the claims raised by the applicant on behalf of group members. Perram J proceeded to state (at [26]– [28]): I do not think that ‘claims’ should be read as including claims in respect of which the Court has no jurisdiction. I so hold. This is not to require that an applicant needs to plead facts establishing jurisdiction. Rather, it is to recognise that what the Applicant has in fact pleaded in this case reveals a lack of jurisdiction to hear the claims of the class as defined. Consequently, s 33C(1) has not been complied with. The class is not properly defined.

On this basis, the court struck out the class definition in the statement of claim, and provided the applicant with a further opportunity to rework the class definition to meet Art 33 requirements.

4.52

Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11; 91 ALJR 37; [2016] HCA 44 (French CF, Kiefel, Keane, Nettle and Gordon JJ)

Proceedings were commenced in the Supreme Court of Victoria by Timbercorp Finance against various outstanding borrowers, including several group members from a separate representative proceeding against the company following its collapse in 2009. Those representative proceedings had been unsuccessful at both first instance, and on appeal. The ‘former group member’ respondents within this Victorian proceeding attempted to raise several claims in their defence, that Timbercorp argued they were precluded from raising due to the principle of Anshun estoppel, in addition to this being an abuse of process. Anshun estoppel operates to ensure that a claim, issue of law or fact previously raised, or ought to have been previously raised in a proceeding, is not alternatively raised in subsequent proceedings. At both first instance, and on appeal, it had been held that the respondents were not precluded by either of these principles. On appeal to the High Court, it was acknowledged that (at 43):

… the State has an interest in preventing relitigation of common issues of fact and law so far as it can be done consistently with the requirement of justice to all parties.

However, the High Court also noted that (at 50): … provisions of Pt 4A also make plain that group members may have other, individual, claims which do not form part of the subject matter of the group proceeding … The ALRC, whilst recognising that the grouping of many claims into one proceeding involving at least one common question of law or fact might have benefits, also recognised that there may be issues which must be decided separately in relation to each group member. And in

[page 91] Wong v Silkfield Pty Ltd, this Court held that it was not necessary for a representative proceeding to be likely to resolve wholly, or even to any significant degree, the claims of all group members.

On this basis (at 53): The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims.

The respondents were able to proceed with their defences, unaffected by Anshun estoppel or claims of abuse of process.

[page 93]

CHAPTER 5 Standing: s 33D • OVERVIEW • Section 33D is concerned with standing to commence and continue representative proceedings. It requires a representative party to have a sufficient interest to commence a proceeding on his or her own behalf against a particular person before they can commence proceedings on behalf of group members. The requirement of a sufficient interest picks up the usual rules for standing that would apply to one party seeking to sue another and requires that those rules be met for a person to be the representative party in representative proceedings. Where multiple defendants are claimed against, the New South Wales and Queensland provisions make it clear that all group members need not have a claim against all defendants. There had been some uncertainty about the position in the Federal Court (and by extension, the Supreme Court of Victoria) where the legislation did not address the issue directly. However, the Full Federal Court in Cash Converters International Ltd v Gray (2014) 223 FCR 139 put the issue beyond doubt and confirmed that in the Federal Court, it is not necessary for each group member to have a claim against each respondent.

• LEGISLATION • Section 33D, Federal Court of Australia Act 1976 (Cth)

Standing (1) A person referred to in paragraph 33C(1)(a) who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that other person on behalf of other persons referred to in that paragraph. (2) Where a person has commenced a representative proceeding, the person retains a sufficient interest: (a) to continue that proceeding; and (b) to bring an appeal from a judgment in that proceeding; even though the person ceases to have a claim against the respondent.

[page 94]

Section 33D, Supreme Court Act 1986 (Vic) Standing (1) A person referred to in paragraph (a) of section 33C(1) who has a sufficient interest to commence a proceeding on the person’s own behalf against another person has a sufficient interest to commence a group proceeding against that other person on behalf of other persons referred to in that paragraph. (2) If a person has commenced a group proceeding, that person retains a sufficient interest— (a) to continue the proceeding; and (b) to bring an appeal from a judgment in the proceeding— even though the person ceases to have a claim against the defendant.

Section 158, Civil Procedure Act 2005 (NSW) Standing (1) For the purposes of section 157(1)(a), a person has a sufficient interest to commence representative proceedings against another person on behalf of other persons if the person has standing to commence proceedings on the person’s own behalf against that other person. (2) The person may commence representative proceedings on behalf of other persons against more than one defendant irrespective of whether or not the person and each of those persons have a claim against every defendant in the proceedings. (3) If a person has commenced representative proceedings, that person retains standing: (a) to continue the proceedings, and (b) to bring an appeal from a judgment in the proceedings, even though the person ceases to have a claim against any defendant.

Section 103C, Civil Proceedings Act 2011 (Qld) Standing (1) A person who has a claim as mentioned in section 103B(1)(a) has a sufficient interest to start a representative proceeding against another person (the proposed defendant) on behalf of other persons who also [page 95] have a claim as mentioned in that section if the person has standing

to start proceedings on the person’s own behalf against the proposed defendant. (2) The person may start a representative proceeding on behalf of other persons against more than 1 defendant, whether or not each of the other persons have a claim against each of the defendants in the proceeding. (3) A person who has started a representative proceeding retains standing to do the following even if the person ceases to have a claim against any or all defendants— (a) continue the proceeding; (b) appeal against a decision in the proceeding.

• COMMENTARY • 5.1 Section 33D requires a representative party to have a sufficient interest to commence a proceeding on his or her own behalf against a particular person before they can commence proceedings on behalf of group members: Ryan v Great Lakes Council (1997) 149 ALR 45 at 48; 78 FCR 309; Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [16]; Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; [2005] FCA 1483 at [90]. 5.2 In Zhang De Yong v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384 at 391; 118 ALR 165 at 171, French J summarised the operation of s 33D: The standing of an individual to commence a proceeding on his or her own behalf confers the standing necessary to commence a representative proceeding on behalf of the others referred to in s 33C(1)(a).

In Smith v University of Ballarat (2006) 229 ALR 343 at [30], Young J stated: An applicant in a representative proceeding must himself or herself have standing to sue a particular respondent.

Standing is defined by the Encyclopaedic Australian Legal Dictionary as: ‘The

entitlement of a person or organisation to invoke the jurisdiction of a court to hear a case’. The Oxford Australian Law Dictionary defines standing or locus standi as: ‘A requirement of the common law and many statutes that a plaintiff have a sufficient individual or special interest in a matter before being permitted to litigate’. A useful summary of the history of standing is provided by Gummow J in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [page 96] (2000) 200 CLR 591; 169 ALR 616; [2000] HCA 11. See also Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247; 155 ALR 684; [1998] HCA 49. Further, in Truth About Motorways, Kirby J outlines the wide variety of formulations used to confer standing under federal legislation: at [131]–[151]. 5.3 Traditionally, courts have permitted their processes to be used only by a litigant who can demonstrate that the conduct of another person has invaded or threatens to invade some legal right of the litigant. Consequently, in the area of private law the necessary status to afford standing is usually clear. However, in relation to public law the courts have needed to devise tests for determining who may invoke the processes and powers of the courts, such as, ‘having a special interest in the subject matter of the action’: Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493; 28 ALR 257. Standing is also frequently conferred by legislation with the parliament determining who (for example, private citizen and/or an arm of government) should have the ability to enforce the rights and duties that it creates.

Overcoming the Common Law on Standing 5.4 In Symington v Hoechst Schering Agrevo Pty Ltd (1997) 149 ALR 261 at 264; 78 FCR 164, Wilcox J explained:

The evident purpose of subs (1) is to overcome the common law standing rule that says A may not bring a damages action on behalf of B against C. Normally a person can only bring an action for damages on his or her own behalf. If that rule was applied in representative proceedings, it would defeat their purpose. Section 33D(1) is designed to abrogate the common law rule but, of course, it does so only to the extent of the provision made by the subsection itself.

The Full Federal Court in Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [97], saw s 33D as continuing the approach in representative actions allowed by the Court of Chancery which gave a representative party standing to make claims on behalf of group members.

Standing Conferred and Limited 5.5 In Ryan v Great Lakes Council (1997) 78 FCR 309; 149 ALR 45 at 48, Wilcox J explained that s 33D both conferred and limited standing. Further, the section operated as follows: The subsection takes one of the seven or more claimants referred to in s 33C(1)(a) (the first person) whose individual interest is sufficient to support a proceeding brought by the first person against a particular person, and gives the first person the further entitlement to make claims on behalf of others

[page 97] against ‘that other person’. The ‘other person’ is the person referred to earlier in s 33D(1) as ‘another person’, that is, the person against whom seven or more members, including the applicant, have claims. [Emphasis in original]

See also Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164; 149 ALR 261; Dorajay Pty Ltd v Aristocrat Leisure Ltd at [90]. 5.6 In Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (2015) 325 ALR 539, Wigney J rejected the suggestion, in the context of a common fund application, that the conferral of standing meant that a representative party was performing a role analogous to a liquidator. His Honour observed (at [121]–[125]): Given the specific powers, duties and responsibilities that a liquidator has by virtue of his or her office and specific provisions of the Corporations Act, there is no sound basis for

equating the position of a liquidator with the position of a representative party in representative proceedings. A liquidator who recovers property and creates a fund in the course of the winding up of a company is entitled to use that fund to make payments and meet debts and claims, including expenses incurred by the liquidator in the course of the winding up, subject to specific provisions of the Corporations Act and questions of priority: see s 556 of the Corporations Act which deals with questions of priority. A representative party, on the other hand, may have standing to commence a representative proceeding on behalf of group members (s 33D of the FCA Act). A representative party does not, however, have any rights in relation to the use or distribution of any recoveries made on behalf of group members without further order of the Court.

Section 33D and Multiple Respondents 5.7 In the Federal Court, Victoria and Queensland (s 33D (Cth and Vic) and s 103C (Qld)) the provisions make it clear that, where there are several respondents, the applicant must personally have a claim against each of them. In the hypothetical situation of two applicants and two respondents, it is not permissible for each applicant to only have a claim against one of the respondents. 5.8 In Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164; 149 ALR 261, Wilcox J held (at 264): I think it is clear that the applicant — that is to say, the representative party — must himself or herself have standing to sue the particular respondent and, where there is more than one respondent, each of them. It is not enough that the applicant has standing to sue one respondent and other people have claims against some other respondent which arise out of similar or related circumstances and give rise to a substantial common issue of law or fact.

[page 98] 5.9

See also Ryan v Great Lakes Council (1997) 78 FCR 309; 149 ALR 45.

5.10 The position appears to be different in New South Wales. Civil Procedure Act 2005 (NSW) s 158(2) includes the following: The person may commence representative proceedings on behalf of other persons against

more than one defendant irrespective of whether or not the person and each of those persons have a claim against every defendant in the proceedings. (Emphasis added)

5.11 One reading of the New South Wales provision is that a person who has a claim against one defendant may (subject to satisfying other threshold requirements for commencement of representative proceedings) commence proceedings against more than that one defendant, irrespective of whether that person has a claim against that defendant. That position was reflected in Johnston v Endeavour Energy [2015] NSWSC 1117, where Garling J discussed the features of Civil Procedure Act 2005 (NSW) s 158: The first feature of the Part 10 procedure is that a plaintiff can nominate themselves, by commencing proceedings under Part 10, as a representative of people who have claims which arise out of or in respect of the same, similar or related circumstances, and which otherwise comply with the provisions of s 157. The plaintiff can nominate themselves without the knowledge of, or the consent of, individuals to their inclusion in the proceedings. The issue of consent to participation in the proceedings is dealt with by the opt out procedure set out in s 162 of the Civil Procedure Act and the following sections. At the time of the commencement of the proceedings, there needs to be at least seven people who have claims against the same person, but there are no other provisions relating to the size of the group. In many cases the likely, and the maximum, size of the defined group is unknown, although estimates which may or may not be well informed, are often made. The second feature is that a plaintiff in representative proceedings retains standing to commence the proceedings against more than one defendant, even though the plaintiff does not have a claim against all of the defendants: s 158(2) Civil Procedure Act. The third feature is that a plaintiff, having commenced representative proceedings, retains standing to continue proceedings, including bringing an appeal from a judgment in proceedings, even though the plaintiff personally has ceased to have any claim against any defendant: s 158(3) Civil Procedure Act. Put differently, a plaintiff in a representative proceeding retains standing to participate, and to continue to conduct proceedings, in which he has no personal interest or available claim against any defendant. The rationale for this is that the named plaintiff is a person authorised, and permitted, by statute to represent the interests of all individuals who fall within the group membership description.

[page 99]

‘Against the Same Person’ Controversy

5.12 In the Federal Court and Victoria, s 33D does not address whether every group member must have a claim against every respondent. See the discussion in Chapter 4 (s 33C). This is contrasted to the position in New South Wales and Queensland, where s 158(2) and s 103C(2) make it clear that every group member does not need to have a claim against every defendant. 5.13 To the extent there was any controversy in respect of the position in the Federal Court and the Supreme Court of Victoria, this has now been resolved following the Full Federal Court decision in Cash Converters International Ltd v Gray (2014) 223 FCR 139, which put the issue beyond doubt and confirmed that in the Federal Court, it is not necessary for each group member to have a claim against each respondent.

Sufficient Interest and Public Interests 5.14 Where a statutory authority is conferred standing to commence proceedings, s 33D operates to confer standing to commence proceedings as a representative party on behalf of group members. 5.15 In Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512; 156 ALR 273; [1998] FCA 819, Lindgren J raised the issue of whether a government agency such as the Australian Competition and Consumer Commission (ACCC) had the requisite standing under s 33D to bring a claim for an injunction where the group members it represented sought damages. The injunction sought by the ACCC was pursuant to Trade Practices Act 1974 (Cth) s 80, which granted standing to the ACCC and ‘any other person’. His Honour referred to the Second Reading Speech for the Federal Court of Australia Amendment Bill 1991, which referred to a person’s loss or damages as suggesting that Pt IVA was introduced to assist ‘private persons who had suffered loss’: at FCR 521; ALR 280. His Honour observed (at FCR 523–4; ALR 282–3): I doubt that the ACCC is entitled to act as a representative party under Pt IVA where it has no interest of its ‘own’ to protect and has only statutory standing to apply for a remedy which will protect a public interest. The reason is that I doubt that in such circumstances the ACCC has a ‘claim’ against the respondent for the purposes of s 33C(1)(a) of the FCA Act.

It seems to me that the word ‘claim’ is at least arguably related to the ‘sufficient interest to commence a proceeding on his or her own behalf’ to which s 33D(1) refers. That expression seems to invoke a concept similar to the ‘special interest’ test of standing applied to private suits for injunctions in aid of public rights; cf Boyce v Paddington Borough Council [1903] 1 Ch 109 at 114 and Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493 at 527, 528; 28 ALR 257 per Gibbs J. I think that the having of a

[page 100] ‘claim’ to which s 33C(1)(a) refers and the having of a ‘sufficient interest’ on one’s own behalf to which s 33D(1) refers, are notions which are not apt to catch simply being ‘any person’ authorised by such provisions as s 80 of the TP Act to seek injunctive relief to enforce statutory provisions enacted in the public interest. As is well known, under s 80 of the TP Act, where a person has engaged or is proposing to engage in conduct that constitutes a contravention of a provision of Pt IV, IVA or V of that Act, the court may grant an injunction on the application of the ACCC ‘or any other person’. If this statutory locus standi is a ‘claim’ for the purposes of s 33C(1)(a), the whole world has ‘claims’ against the contravener or intending contravener, and any one person in the world is authorised by s 33C(1) to commence a proceeding on his or her own behalf and on behalf of all other persons in the world. It may be suggested in answer that this is so, but that if such injunctive relief were the only relief claimed, ‘all the relief sought [could] be obtained by means of a proceeding other than a representative proceeding under [Pt IVA]’ (s 33N(1)(b)) with the result that the court would order that the proceeding no longer continue under Pt IVA. But this does not dispose of the difficulty because not only the ACCC but also ‘any other person’, albeit one who makes no claim to have suffered loss, would, by reason of the locus standi accorded by s 80 of the TP Act, be entitled to commence a representative proceeding seeking not only injunctive relief but, as well, compensatory relief on behalf of loss sufferers. In my view, the preferable construction of ss 33C(1)(a) and 33D(1) is that a statutory locus standi of the kind given by s 80 of the TP Act, by itself and without more, lies outside those provisions. This view is consistent with the second reading speech set out earlier which evinced an intention that Pt IVA would be used by persons who brought proceedings to prevent, or obtain relief for, loss or damage to their own interests and the interests of other group members, rather than by persons who sought only to protect public interests and whose private interests had not been specially affected at all.

Lindgren J’s reasoning differed from that of Branson J in Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250; 142 ALR 177 and O’Loughlin J in Australian Competition and Consumer Commission v Golden Sphere International Inc (1998) 83 FCR 424, who had held that the ACCC did have a sufficient

interest to have standing. However, Lindgren J acknowledged that Branson and O’Loughlin JJ had expressed a contrary view. He stated (at 284), ‘their Honours’ view is, with respect, not plainly wrong and may be accepted by a Full Court in preference to my own. Therefore, I will follow it’. 5.16 The Full Federal Court had occasion to consider the above three cases on the issue of standing in Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179; 166 ALR 141; [1999] FCA 1250. The Full Court (Wilcox, Ryan and Madgwick JJ) disagreed with Lindgren J and stated (at [18]): We see no reason for interpreting the words ‘sufficient interest to commence a proceeding on his or her own behalf’ in s 33D(1) as invoking the limited

[page 101] and technical concept of standing applied in cases like Boyce v Paddington Borough Council [1903] 1 Ch 109 and Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493; 28 ALR 257. If a statutory provision, like s 80 of the Trade Practices Act, allows ‘any person’ to bring an action for contravention, this means that any person has a sufficient interest to commence a proceeding on his or her own behalf. Section 33D(1) is satisfied. The person may act as representative applicant on behalf of others.

Adequacy of Representation 5.17 Although adequacy of representation is not expressed as a prerequisite to standing, a person who is an inadequate representative may be removed from the position of representative party: see s 33T (Chapter 20).

Ceasing to have a Claim but Continuing the Proceeding 5.18 Section 33D(2) provides that even where that person ceases to have a claim against the respondent, the person who commenced the proceeding is deemed to retain a sufficient interest to continue that proceeding and to bring an appeal from a judgment in that proceeding. In Revian v Dasford Holdings Pty Ltd [2002] FCA 1119, French J interpreted s 33D(2) as follows (at [13]):

Subs (2), consistently with the purpose of subs (1) …, allows the person commencing the representative proceeding to continue it even though that person ceases to have a claim against the relevant respondent. The assumption implicit in subs (2) is that at the commencement of the proceeding the person did have a sufficient interest to initiate it. The subsequent cessation of the claim contemplated by that subsection does not, as a matter of construction, extend to a case in which the applicant had no claim in her own right. Were the contrary construction open, then any intermeddler could commence a representative proceeding and have authority to continue it notwithstanding the lack of any sufficient interest at the outset.

In Johnson Tiles Pty Ltd v Esso Aust Pty Ltd [2003] VSC 212, two representative parties failed in the pursuit of their individual claims but Gillard J observed (at [29]): ‘The fact that the plaintiffs failed does not affect their right or authority to continue with the proceeding — see s 33D(2)’.

• CASE LAW • 5.19

Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164; 149 ALR 261 (Wilcox J)

The applicants were two graziers who alleged that cattle owned by them ingested or absorbed a chemical called endosulfan which was marketed as a pesticide, under [page 102] various brand names, by each of the respondents. The endosulfan products were sprayed from aeroplanes on the cotton fields which adjoined their property on three sides. The applicant alleged that the aerial spray drifted onto their property and contaminated vegetation and water ingested by their cattle. The applicants sued on behalf of themselves and other persons (the group members) who allegedly suffered losses when meat was rejected, cattle impounded and other precautions taken by regulatory authorities following the detection of endosulfan residues in beef and cattle. Wilcox J interpreted s 33D as follows (at 264):

The evident purpose of subs (1) is to overcome the common law standing rule that says A may not bring a damages action on behalf of B against C. Normally a person can only bring an action for damages on his or her own behalf. If that rule was applied in representative proceedings, it would defeat their purpose. Section 33D(1) is designed to abrogate the common law rule but, of course, it does so only to the extent of the provision made by the subsection itself. The first thing to note about the subsection is that it refers to a person, referred to in s 33C(1)(a), who has ‘a sufficient interest to commence a proceeding on his or her own behalf’. That is, one of the seven or more persons who have claims against ‘the same person’ can bring a representative proceeding against that other person ‘on behalf of’ the other six or more persons referred to in that paragraph. As I interpret this provision, it means that where there is a group of seven or more persons, all of whom have claims against a particular person, then any one of those seven or more persons has a sufficient interest to commence a representative proceeding against that person on behalf of the other members of the group. I think it is clear that the applicant — that is to say, the representative party — must himself or herself have standing to sue the particular respondent and, where there is more than one respondent, each of them. It is not enough that the applicant has standing to sue one respondent and other people have claims against some other respondent which arise out of similar or related circumstances and give rise to a substantial common issue of law or fact.

In the present case, the applicants claimed that the product supplied to their neighbours, which contaminated their cattle, was that of the first respondent, Hoechst Schering Agrevo Pty Ltd. Further, they conceded that they personally did not have a claim against the second, third, fourth, fifth or sixth respondents. The result of this was that they had no standing to bring an action against those respondents.

5.20

Ryan v Great Lakes Council (1997) 78 FCR 309; 149 ALR 45 (Wilcox J)

The applicant, Grant Ryan, sued on behalf of himself and all other persons who allegedly suffered injury between certain dates as a result of eating oysters, from the Wallis Lakes region on the north coast of New South Wales, contaminated with the hepatitis A virus. The respondents were the Great Lakes Council, which [page 103]

was said to have certain responsibilities in regard to the water quality of the lake, oyster farmers who allegedly grew the affected oysters, and some oyster distributors. 5.21 The motions the subject of the court’s judgment raised two questions. First, what is the significance of the fact that the applicant’s personal claims concern only two of the 12 surviving respondents? Second, is a representative proceeding properly commenced against a particular person if it does not yet appear that seven or more persons have claims against that person? In relation to the application of s 33D to question 1, Wilcox J said (at 48): In my opinion, s 33D is relevant to s 33C; it goes further than Mr Beach was prepared to concede. Section 33D is concerned with standing, and it addresses two issues of standing, not one issue twice over. Mr Beach is correct in saying subs (2) is concerned to maintain the representative party’s standing beyond any cessation of his or her own claim; but the subsection assumes the representative party had a claim against the relevant respondent in the first place. The verb ‘ceases’ is significant. One cannot cease to have something one never had. Subsection (1) of s 33D may have been inserted out of an abundance of legislative caution. The standing it confers may be implicit in the closing words of s 33C(1) anyway; nonetheless, in confirming that standing, s 33D(1) also limits it. The subsection takes one of the seven or more claimants referred to in s 33C(1)(a) (the first person) whose individual interest is sufficient to support a proceeding brought by the first person against a particular person, and gives the first person the further entitlement to make claims on behalf of others against ‘that other person’. The ‘other person’ is the person referred to earlier in s 33D(1) as ‘another person’, that is, the person against whom seven or more members, including the applicant, have claims. It follows that, in order to utilise the Pt IVA procedure against a given respondent, the applicant must have a personal claim against that respondent that is shared by at least six other persons. The legislation does not prevent several respondents being joined to a single Pt IVA proceeding, so long as the commencement and standing requirements are met by the applicant in respect of each of them. Nor is there any reason why an applicant could not, within the one action, use the Pt IVA procedure against one or more respondents but not against others; the action is in the applicant’s name alone, and it might be convenient to determine connected non-representative claims at the same time as the claims the applicant brings for the benefit of the group. Nor is it forbidden to consolidate the hearing of two or more representative proceedings, brought by different representatives but having, as between them, such similarity as to warrant their being heard together. It is not difficult to imagine cases being handled in that way. There are many possibilities; the proper management course will depend on considerations of convenience, having regard to all the circumstances.

Wilcox J concluded that where the present applicant had no personal claim against a particular respondent, the proceeding was not validly commenced as against that respondent and had to be dismissed. [page 104]

5.22

Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (2015) 325 ALR 539 (Wigney J)

The applicants commenced a representative proceeding and were seeking a ‘common fund’ order. A key issue was whether the proposed order was appropriate or necessary to enable the applicants to recover costs and expenses reasonably incurred by them in securing recoveries for the group members. Amongst other submissions, the applicants submitted that their role was analogous to the role of a liquidator and the principle that where a liquidator has realised property subject to security out of which the secured creditor can take payment, the liquidator’s remuneration and expenses incurred in realising the property can rank in priority to the rights of the secured creditor. Wigney J rejected such analogy (at [121]–[125]): Given the specific powers, duties and responsibilities that a liquidator has by virtue of his or her office and specific provisions of the Corporations Act, there is no sound basis for equating the position of a liquidator with the position of a representative party in representative proceedings. A liquidator who recovers property and creates a fund in the course of the winding up of a company is entitled to use that fund to make payments and meet debts and claims, including expenses incurred by the liquidator in the course of the winding up, subject to specific provisions of the Corporations Act and questions of priority: see s 556 of the Corporations Act which deals with questions of priority. A representative party, on the other hand, may have standing to commence a representative proceeding on behalf of group members (s 33D of the FCA Act). A representative party does not, however, have any rights in relation to the use or distribution of any recoveries made on behalf of group members without further order of the Court.

5.23

Cash Converters International Ltd v Gray (2014) 223 FCR 139 (Jacobson, Middleton and Gordon JJ)

See Chapter 4 (s 33C) for a fuller discussion of this case. The key issue in this case was whether each group member must have a claim against each respondent. The Full Court briefly referred to s 33D when explaining why the provisions in Federal Court Act Pt IV do not require each group member to have a claim against each respondent (at [25]): The possibility of multiple respondents and variation between claimants in a representative proceeding is expressly acknowledged in a number of provisions of Pt IVA. Section 33D provides that a person who has a ‘sufficient interest to commence a proceeding’ on their own behalf against another person can commence a representative proceeding on behalf of other persons. That is, the applicant must have a claim against all respondents. That applicant retains a

[page 105] sufficient interest to continue that representative proceeding and to bring an appeal from a judgment in that proceeding, even though the applicant ceases to have a claim against the respondent.

5.24

Johnston v Endeavour Energy [2015] NSWSC 1117 (Garling J)

Garling J discussed the operation of the New South Wales provision, s 158, in the following terms (at [64]): The first feature of the Part 10 procedure is that a plaintiff can nominate themselves, by commencing proceedings under Part 10, as a representative of people who have claims which arise out of or in respect of the same, similar or related circumstances, and which otherwise comply with the provisions of s 157. The plaintiff can nominate themselves without the knowledge of, or the consent of, individuals to their inclusion in the proceedings. The issue of consent to participation in the proceedings is dealt with by the opt out procedure set out in s 162 of the Civil Procedure Act and the following sections.

At the time of the commencement of the proceedings, there needs to be at least seven people who have claims against the same person, but there are no other provisions relating to the size of the group. In many cases the likely, and the maximum, size of the defined group is unknown, although estimates which may or may not be well informed, are often made. The second feature is that a plaintiff in representative proceedings retains standing to commence the proceedings against more than one defendant, even though the plaintiff does not have a claim against all of the defendants: s 158(2) Civil Procedure Act. The third feature is that a plaintiff, having commenced representative proceedings, retains standing to continue proceedings, including bringing an appeal from a judgment in proceedings, even though the plaintiff personally has ceased to have any claim against any defendant: s 158(3) Civil Procedure Act. Put differently, a plaintiff in a representative proceeding retains standing to participate, and to continue to conduct proceedings, in which he has no personal interest or available claim against any defendant. The rationale for this is that the named plaintiff is a person authorised, and permitted, by statute to represent the interests of all individuals who fall within the group membership description.

[page 107]

CHAPTER 6 Consent to be a Group Member: s 33E • OVERVIEW • The representative proceeding regimes adopted in the Federal Court, Victoria, New South Wales and Queensland do not require group members to consent to their inclusion in the group unless they fall within one of the stated exceptions. This reflects the opt-out nature of the representative proceedings regime. The exceptions may be summarised as the Commonwealth, the states and the territories and their ministers and officers, and a body corporate established for a public purpose by a law of the Commonwealth, of a state or of a territory, other than an incorporated company or association. The Victorian legislation also adds any judge, magistrate or other judicial officer of the Commonwealth, a state or a territory. While consent to be a group member is not required, this does not mean that commencing proceedings on behalf of a selected group of individuals who have given their consent is prohibited.

• LEGISLATION • Section 33E, Federal Court of Australia Act 1976 (Cth) Is consent required to be a group member? (1) The consent of a person to be a group member in a representative proceeding is not required unless subsection (2) applies to the person. (2) None of the following persons is a group member in a representative

proceeding unless the person gives written consent to being so: (a) the Commonwealth, a State or a Territory; (b) a Minister or a Minister of a State or Territory; (c) a body corporate established for a public purpose by a law of the Commonwealth, of a State or of a Territory, other than an incorporated company or association; or (d) an officer of the Commonwealth, of a State or of a Territory, in his or her capacity as such an officer.

[page 108]

Section 33E, Supreme Court Act 1986 (Vic) Consent of group member (1) Subject to subsection (2), the consent of a person to be a group member is not required. (2) None of the following persons is a group member unless the person gives consent in writing to being so— (a) the Commonwealth, a State or a Territory; or (b) a Minister of the Commonwealth, a State or a Territory; or (c) a body corporate established for a public purpose by a law of the Commonwealth, a State or a Territory, other than an incorporated company or association; or (d) any judge, magistrate or other judicial officer of the Commonwealth, a State or a Territory; or (e) any other officer of the Commonwealth, a State or a Territory, in his or her capacity as an officer.

Section 159, Civil Procedure Act 2005 (NSW)

Is consent required to be a group member? (1) Subject to subsection (2), the consent of a person to be a group member is not required. (2) None of the following is a group member in representative proceedings unless the person gives consent in writing to being so: (a) the Commonwealth, a State or a Territory, (b) a Minister of the Commonwealth, a State or a Territory, (c) a body corporate established for a public purpose by a law of the Commonwealth, a State or a Territory, other than an incorporated company or association, (d) an officer of the Commonwealth, a State or a Territory, in his or her capacity as an officer.

Section 103D, Civil Proceedings Act 2011 (Qld) Whether consent required to be a group member (1) Subject to subsection (2), the consent of a person to be a group member is not required. [page 109] (2) Each of the following persons is a group member only if the person gives consent in writing to be a group member— (a) the Commonwealth or a State; (b) a Minister of the Commonwealth or a State; (c) a body corporate established for a public purpose by a law of the Commonwealth or a State, other than an incorporated company or association; (d) an officer of the Commonwealth or a State, in his or her capacity as an officer.

• COMMENTARY • Consent Not Required 6.1 The courts have commented on numerous occasions that consent of a group member to participate in a representative proceeding is not required. This reflects the policy choice that was made to introduce an ‘opt-out’ representative proceeding regime: see discussion in Chapters 9 (s 33H) and 10 (s 33J). Of course, this does not mean that all class actions need to be an ‘opt-out’ proceeding. Commencing a representative proceeding on behalf of an identifiable group of individuals who have taken steps to participate in the action (for example, by signing a litigation funding agreement) is permissible also. In Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; 244 ALR 600; [2007] FCAFC 200 at [56], Jacobson J stated: Section 33E(1) provides that subject to a number of limited exceptions stated in s 33E(2), the consent of a person to be a group member in a representative proceeding is not required.

See also Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (2015) 325 ALR 539 at [64] (‘The consent of a person to be a group member in a representative proceeding is not required, other than in the case of certain specified persons’); Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 338 ALR 188 at [179] (‘Parliament legislated an opt out model under which it is not necessary to obtain the consent of a person to be a class member (s 33E)’); Muswellbrook Shire Council v The Royal Bank of Scotland NV (9 June 2016) [2016] FCA 819 at [9] (‘It is not necessary for a person to consent to being included as a group member (s 33E(1))’); Courtney v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 at [16] (‘Nor is the consent of a person to be a group member in a representative proceeding required, except for limited classes of persons: s 33E(1), (2)’); Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [14] (‘The consent of a person to be a group member in a representative proceeding is not required, [page 110]

except for limited classes of persons: s 33E(1), (2)’); Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229 at [43] (‘Section 33E(1) states that, subject to presently irrelevant exceptions, the consent of a person to be a group member is not required’); Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake (1993) 45 FCR 457; 118 ALR 510; Zhang De Yong v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384; 118 ALR 165 at 171–2; Bright v Femcare Ltd (1999) 166 ALR 743; [1999] FCA 1377 at [6]; Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; 67 IPR 124; [2005] FCA 1483 at [90]; Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515; [2005] FCA 138 at [14]. 6.2 In Victoria and New South Wales, the same position has been adopted. In National Australia Bank Ltd v Pathway Investments Pty Ltd (2012) 265 FLR 247; [2012] VSCA 168 at [42], Bell AJA (Bongiorno and Harper JJA agreeing) observed that: ‘Under s 33E, the consent of a person to be a group member is not required.’ See also Oldham v Law Institute of Victoria Ltd (Legal Practice) [2012] VCAT 571 at [91], where in the context of a legal practitioner initiating two class actions pursuant to Supreme Court Act 1986 (Vic) Pt 4A without obtaining instructions from each nominated lead plaintiff, Bowman APJ observed: There has been, and still is, confusion as to what is required by way of consent. This has even been evident in the present proceeding when it was suggested in cross-examination of Oldham that consent of the class is required. This is clearly not so — see s 33E of the Supreme Court Act.

In Mercieca v SPI Electricity Pty Ltd; SPI Electricity v Eagle Travel Tower Services Pty Ltd [2012] VSC 204, Emerton J stated (at [23]): Two sub-groups within the overall claim group are subject to special provision in the deed of settlement. Settlement is conditional upon the Court permitting an amendment of the group definition to exclude municipal councils and Commonwealth, State and Territory authorities and instrumentalities. This step is described as precautionary, because s 33E of the Supreme Court Act provides that such entities are not group members unless they consent to be so. …

Consent Provided

6.3 While consent of group members is not required, there is no prohibition on consent being given and a representative proceeding only being brought on behalf of a selected group. In P Dawson Nominees Pty Ltd v Multiplex Ltd (2007) 242 ALR 111; [2007] FCA 1061, Finkelstein J observed (at [49]): I acknowledge that in the usual case a class action is brought without the express consent of all of group members. Section 33E contemplates that course, except in presently irrelevant circumstances. While consent to bring an action is not required by Part IVA, it is not forbidden. In effect the question raised by

[page 111] the respondents is whether a class action can be commenced consensually by a self selected group that has decided to exclude others who also have claims against the respondents. The basis for the selection seems to be irrelevant. I see no reason why that course should not be permitted.

See further discussion in Chapters 9 (s 33H) and 10 (s 33J) regarding ‘open’ and ‘closed’ classes.

Opt-out Procedure and Consent 6.4 While a representative party is able to commence a proceeding without consent of a person who is to be a group member, there is a mandatory requirement that group members be provided with an opportunity to ‘opt out’ or exclude themselves from the proceedings. The opt-out requirement is discussed in Chapter 10 (s 33J). The relationship between ss 33E and 33J has been considered by the Federal Court on a number of occasions. In Muswellbrook Shire Council v The Royal Bank of Scotland NV (9 June 2016) [2016] FCA 819, Rares J observed (at [9]): An originating application or other document filed in support of it, such as a statement of claim, must describe or otherwise identify the group members, specify the nature of the claims made on their behalf, the relief claimed and ‘specify the questions of law or fact common to the claims of group members’ (s 33H(1)). It is not necessary for a person to consent to being included as a group member (s 33E(1)), however, s 33J(1) requires that the

Court must fix a date before which a group member may opt out of a representative proceeding.

In Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4) [2010] FCA 749 at [17], Flick J stated: The opt-out requirements of Pt IVA are ‘an important element of the scheme laid down by that part of the Act’: Vernon v Village Life Ltd [2009] FCA 516 at [59] per Jacobson J. The ability to opt out of a representative proceeding assumes particular relevance because the consent of a person to be a group member is not required, except in specified circumstances not of present relevance: s 33E. See also: Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 252 per Branson J; Guglielmin v Trescowthick (No 2) [2005] FCA 138 at [14]; 220 ALR 515 at 519 per Mansfield J.

In King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 121 FCR 480; 191 ALR 697; [2002] FCA 872, Moore J observed (at [23]): Part IVA contains features not found in conventional litigation. … It is not necessary for people on whose behalf a representative proceeding is brought to consent (see s 33E) though the opportunity must be given to those people to opt out of proceeding (see s 33J). …

[page 112]

Officer of the Commonwealth 6.5 The expression ‘officer of the Commonwealth’ was considered in CPSU, Community and Public Sector Union v Commonwealth (1999) 94 FCR 146; [1999] FCA 653, in relation to deputy registrars of the Family Court. Deputy registrars of the Family Court have been found to be officers of the Commonwealth (see Re Winton; Ex parte Jolliffe (1987) 17 FCR 89 at 93, 96) but it was argued that the deputy registrars were part of the proceeding in a capacity other than as an ‘officer of the Commonwealth’. Marshall J found that the members of the group were defined by reference to the fact that they held office as deputy registrars: at [65]. Consequently, this was not a case where a deputy registrar was pursuing some individual right divorced from the holding of his or her office such as a consumerrelated or shareholder complaint. His Honour held that the consent of the deputy registrar was therefore required.

Body Corporate 6.6 An example of a body corporate established for a public purpose by a law of the Commonwealth is the Australian Competition and Consumer Commission: Australian Competition and Consumer Commission v Golden Sphere International Inc (1998) 83 FCR 424; ATPR 41-638.

Consent and Representative Parties 6.7 In Australian Competition and Consumer Commission v Golden Sphere International Inc, the ACCC was the representative party for persons who participated in a pyramid selling scheme for which no written consent had been given by the ACCC. O’Loughlin J found that an entity listed under s 33E as needing to consent to be a group member did not have to consent to be a representative party, but if that view was incorrect the act of instituting the proceeding was evidence that the party was consenting to be a group member.

Judges 6.8 Only Victoria requires written consent for a judge, magistrate or other judicial officer of the Commonwealth, a state or a territory to be a group member. As a result, in the other jurisdictions it may be prudent to exclude judges from the group definition because it could otherwise create a conflict of interest for a judge if they stood to benefit from the outcome of the litigation. Examples of group definitions excluding judges are Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564; [2000] FCA 1572 at [16]; Wright Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85 at [31].

Timing of Consent 6.9 In Matthews v SPI Electricity Pty Ltd (Ruling No 12) [2012] VSC 549 at [7], Forrest J found that consent could be given at any time:

[page 113] There is no temporal limitation in s 33E(2) as to when consent can be given. It appears that the section is ambulatory and intended to have application at any stage in the proceeding. It follows that absent an order of the Court, the Commonwealth and the State or any other person described in s 33E(2) can give consent to being a group member at any point in time whilst the proceeding is on foot.

The difficulty with this interpretation is that it may allow an entity that needs to consent to wait and see whether a favourable outcome is achieved before consenting. This would allow those entities to unilaterally decide whether they are bound by the outcome of the litigation. See the discussion in Paxtours International Travel Pty Ltd v Singapore Airlines Ltd [2012] FCA 426 at [45]–[67].

• CASE LAW • 6.10

Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 338 ALR 188 (Murphy, Gleeson and Beach JJ)

The Full Federal Court reiterated the parliamentary intention under s 33E of creating an opt-out mechanism where no consent is required to be a group member (at [179]): Parliament legislated an opt out model under which it is not necessary to obtain the consent of a person to be a class member (s 33E) and all persons who fall within the class definition are and remain class members unless they decide to opt out (s 33J). If a person falling within the class definition does not opt out then he or she is bound by the outcome of the proceeding (s 33ZB). It chose an opt out over an opt in procedure on grounds of ‘equity and efficiency’, because it considered that an opt out procedure ‘ensures that people, particularly those who are poor or less educated, can obtain redress where they may be unable to take the positive step of having themselves included in the proceedings’: Second Reading Speech, p 3175.

6.11

Muswellbrook Shire Council v The Royal Bank of Scotland NV (9 June 2016) [2016] FCA 819 (Rares J)

Rares J observed (at [9]): An originating application or other document filed in support of it, such as a statement of claim, must describe or otherwise identify the group members, specify the nature of the claims made on their behalf, the relief claimed and ‘specify the questions of law or fact common to the claims of group members’ (s 33H(1)). It is not necessary for a person to consent to being included as a

[page 114] group member (s 33E(1)), however, s 33J(1) requires that the Court must fix a date before which a group member may opt out of a representative proceeding.

6.12

Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc (1998) 83 FCR 424; ATPR 41-638 (O’Loughlin J)

Three respondents were alleged to have promoted, or taken part in the promotion of, a pyramid selling scheme in contravention of Trade Practices Act 1974 (Cth) s 61(2A). The Australian Competition and Consumer Commission (the ACCC) instituted the proceeding on its own behalf, but also in a representative capacity for those persons who participated in the pyramid selling scheme. The respondents sought to challenge the proceeding on the basis that the ACCC had not expressly consented to being a group member. O’Loughlin J rejected the argument (at 447): The ACCC would be ‘a body corporate established for a public purpose …’ but I do not consider that some form of written consent from the ACCC was a condition precedent to the institution of these proceedings. In the first place, the combined effect of s 33C and s 33D is to identify a person (‘A’) as the one who is entitled to institute the proceeding; the person who is then referred to in s 33E is not person ‘A’ but person ‘B’. Secondly, if the first answer should be incorrect, the mere act of instituting the proceeding is abundant evidence that the party is consenting to be a group member: and in that case it would be unnecessary for a separate form of consent to be exhibited. The respondents are not assisted by the provisions of s 33E.

6.13

CPSU, Community and Public Sector Union

v Commonwealth (1999) 94 FCR 146; [1999] FCA 653 (Marshall J) The expression ‘officer of the Commonwealth’ was considered in relation to deputy registrars of the Family Court. Deputy registrars of the Family Court had previously been found to be officers of the Commonwealth (see Re Winton; Ex parte Jolliffe (1987) 17 FCR 89 at 93, 96). In the current case, it was argued that the deputy registrars were part of the proceeding in a capacity other than as an ‘officer of the Commonwealth’. Marshall J observed (at [62]–[66]): Mr Bromberg submitted that s 33E(2)(d) of the FC Act does not affect claims by such officers in their ‘individual’ as distinct from ‘public’ capacity. In support of that submission Mr Bromberg referred to the relevant portion of the Explanatory Memorandum which accompanied the Federal Court of Australia Amendment Bill 1991(Cth). It provides as follows:

[page 115] 14. This section provides that the consent of a person to be a group member is not required unless that person is the Commonwealth, a State or Territory or a Minister, officer or certain agencies of the Commonwealth, a State or Territory. The activities of Governments, government agencies, Ministers and officials may be subject to legislative and other restraints which make inappropriate the inclusion of such persons in a representative proceeding without consent. The Explanatory Memorandum identifies a reason as to why the Federal Government felt it necessary to introduce the provision. It does not purport to provide the only reason for such inclusion. Whether an officer of the Commonwealth is a member of a group in a representative proceeding in her or his capacity as such or in some other capacity will always be a question of fact to be determined in every case. In this matter the members of the group are defined by reference to the fact that they hold office as Deputy Registrars. This is not a case where a Deputy Registrar is pursuing some individual right divorced from the holding of her or his office, for example a consumerrelated complaint. The Court is of the view that the members of the representative group in this proceeding are members in their capacity as officers of the Commonwealth. Consequently written consent of those of them who are not named as second applicants is required for the proceeding to continue to be a representative proceeding. If such written consents are forthcoming the size

of the group will be commensurate with the number of such persons who give that consent together with the named second applicants.

[page 117]

CHAPTER 7 Persons Under Disability: s 33F • OVERVIEW • The effect of s 33F (and the equivalent provisions in New South Wales and Queensland) is that a person under a disability may be a member of a group (but not an active participant in group proceedings) without a litigation guardian. Persons under a legal incapacity or disability who take part in litigation must be represented by a litigation representative (formerly next friend) (Federal Court — Federal Court Rules 2011 (Cth) r 9.61), litigation guardian (Victoria — Supreme Court (General Civil Procedure) Rules 2005 (Vic) O 15 r 15.02; Queensland — Uniform Civil Procedure Rules 1999 (Qld) s 93(1)) or tutor (New South Wales — Uniform Civil Procedure Rules 2005 (NSW) r 7.14). However, s 33F creates an exception to this rule, but only when the person is a group member. If the person under a disability is to be the representative party (or otherwise take active steps in the representative proceeding) then a litigation representative would have to be appointed to conduct the proceedings.

• LEGISLATION • Section 33F, Federal Court of Australia Act 1976 (Cth) Persons under disability (1) It is not necessary for a person under disability to have a next friend

or committee merely in order to be a group member. (2) A group member who is under disability may only take a step in the representative proceeding, or conduct part of the proceeding, by his or her next friend or committee, as the case requires.

Section 33F, Supreme Court Act 1986 (Vic) Persons under disability (1) It is not necessary for a person under disability to have a litigation guardian merely in order to be a group member. (2) A group member who is a person under disability may only take a step in the group proceeding, or conduct part of the proceeding, by the group member’s litigation guardian.

[page 118]

Section 160, Civil Procedure Act 2005 (NSW) Persons under legal incapacity (1) It is not necessary for a person under legal incapacity to have a tutor merely in order to be a group member. (2) A group member who is a person under legal incapacity may only take a step in representative proceedings, or conduct part of the proceedings, by the member’s tutor.

Section 103E, Civil Proceedings Act 2011 (Qld) Persons under legal incapacity (1) It is not necessary for a person under a legal incapacity to have a litigation guardian merely in order to be a group member.

(2) A group member who is a person under a legal incapacity may only take a step in the representative proceeding or conduct part of the proceeding by the member’s litigation guardian. (3) In this section—person under a legal incapacity has the meaning given by the Supreme Court of Queensland Act 1991.

• COMMENTARY • Purpose of Provision 7.1 The Australian Law Reform Commission recommended the current regime to enable persons under a disability or incapacity to take the benefit of and be bound by a representative proceeding: Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [130]. The operation of s 33F is summarised by Callinan J in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 at [160]: The effect of s 33F is that a person under a disability may be a member of a group (but not an active participant in group proceedings) without a litigation guardian.

Disability and Incapacity 7.2 The Federal Court Rules 2011 (Cth) Sch 1 Dictionary contains the following definitions: mentally disabled person means a person who, because of a mental disability or illness, is not capable of managing the person’s own affairs in a proceeding.

[page 119] minor means a person under the age of 18 years. person under a legal incapacity means: (a) a minor; or

(b) a mentally disabled person.

7.3 The Supreme Court (General Civil Procedure) Rules 2005 (Vic) O 15 r 15.01 contains the following definitions: handicapped person means a person who is incapable by reason of injury, disease, senility, illness or physical or mental infirmity of managing his or her affairs in relation to the proceeding; person under disability means minor or handicapped person.

7.4 The Civil Procedure Act 2005 (NSW) s 3 defines a person under a legal incapacity as: any person who is under a legal incapacity in relation to the conduct of legal proceedings (other than an incapacity arising under section 4 of the Felons (Civil Proceedings) Act 1981) and, in particular, includes: (a) a child under the age of 18 years, and (b) an involuntary patient, a forensic patient or a correctional patient within the meaning of the Mental Health Act 2007, and (c) a person under guardianship within the meaning of the Guardianship Act 1987, and (d) a protected person within the meaning of the NSW Trustee and Guardian Act 2009, and (e) an incommunicate person, being a person who has such a physical or mental disability that he or she is unable to receive communications, or express his or her will, with respect to his or her property or affairs.

7.5

Uniform Civil Procedure Rules 2005 (NSW) r 7.13 adds: In this Division, person under legal incapacity includes a person who is incapable of managing his or her affairs.

7.6 The Supreme Court of Queensland Act 1991 (Qld) Sch 5 defines a person under a legal incapacity to mean: (a) A person with impaired capacity; or (b) A young person.

[page 120]

Steps Requiring a Litigation Representative 7.7 If the person under a disability wants to take an active step in the proceedings a litigation representative is needed. Such steps include being the representative party, a sub-group representative, pursuing individual issues, opting out or expressing a view in relation to a settlement: see Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988), at [129]–[130].

Person Under a Disability and Settlement 7.8 In regular litigation a settlement involving persons under a disability must be approved by the court: see Federal Court Rules 2011 (Cth) r 9.70; Supreme Court (General Civil Procedure) Rules 2005 (Vic) O 15 r 15.08; Civil Procedure Act 2005 (NSW) s 76; Uniform Civil Procedure Rules 1999 (Qld) s 98(1); Stephens-Sidebottom v Victoria (Department of Education and Early Childhood Development) [2011] FCA 893. In representative proceedings a settlement needs to be approved by the court in any event: s 33V (Chapter 22). However, where the group members include persons under a disability, there may be factors which influence the court’s consideration of an application to approve a settlement. In Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678; [1999] FCA 104, Finkelstein J observed (at [22]) that the settlement he was asked to approve was likely to involve some group members who were under a disability. Further, the settlement scheme made specific provision for the protection of rights of persons under a disability, in particular, that such a person would be represented by another who by law is entitled to act on his or her behalf or by a solicitor. Consequently, the representative or solicitor would be obligated to take the necessary steps to lodge a claim on behalf of the person under disability. Finkelstein J regarded this as sufficient protection for persons under a disability such that it would not prevent approval of the settlement. The protection of persons under a disability also arose in Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 at [415] and Downie v Spiral Foods Pty Ltd [2015] VSC 190. In Downie, the following measures (set

out at [77]–[84]) were found sufficient to address the vulnerabilities that persons under a disability (referred to as an O 15 registrant after the relevant Victorian court rule) may have: at [165]. The settlement administrator appointed a personal representative for each O 15 registrant to represent the person in the settlement process. Under the settlement scheme, the administrator conducted an initial assessment of whether an O 15 registrant was a group member as per the pleaded group definition. However, unlike standard assessments, if it were determined that an O 15 registrant was a group member, then the remainder of the assessment was conducted by independent counsel. Where an O 15 registrant was found not to be a group member, that O 15 registrant was able to seek a review of the decision by independent counsel. Further, [page 121] within the settlement distribution process, an O 15 registrant could seek review by another independent member of counsel, in the same way that independent review was available for a standard registrant. However, the O 15 registrant must obtain leave from the administrator before doing so, having already had his or her initial assessment conducted by independent counsel. The leave requirement is not onerous: it need only be ‘on the cards’ that the other independent review might produce a higher assessment value. The time limits for O 15 group members were 42 days for each stage; longer than those for standard registrants. Unlike standard registrants, no bond was required to be paid for O 15 registrants in respect of the review process. For O 15 registrants, assessments were subject to approval by the Senior Master of the Court, who would have the benefit of any statement of reasons given in the assessment process and could require the administrator to provide a report.

• CASE LAW •

7.9

Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 (Black CJ, Sackville and Emmett JJ)

The Full Federal Court observed (at [14]): … Nor is it necessary for a person under a disability to have a next friend or committee merely to be a group member: s 33F(1). However, a group member who is under a disability may only take a step in the representative proceeding, or conduct part of the proceeding, by his or her next friend or committee: s 33F(2).

7.10

Downie v Spiral Foods Pty Ltd [2015] VSC 190 (Forrest J)

A representative proceeding was commenced against the owner, distributor and manufacturer of Bonsoy Soy Milk, under Trade Practices Act 1974 (Cth) ss 74D and 75AD, due to alleged injury and loss suffered by almost 500 Bonsoy consumers. Bonsoy had subsequently been voluntarily recalled across Australia due to high levels of iodine being detected in the product, posing a threat to public health. Eight of the group members involved in the proceeding were disabled under Supreme Court (General Civil Procedure) Rules 2005 (Vic) O 15. An application for the approval of the settlement of the proceeding was sought, under Supreme Court Act 1986 (Vic) s 33V. [page 122] Forrest J noted that in determining whether the proposed settlement was fair and reasonable, the court played a ‘protective role’ (at [46]–[47]): … akin to the exercise carried out by a court in determining, under O 15 of the Rules whether the settlement of a claim brought by a person under a disability should be approved.

In regards to those involved in the proceeding who were under a disability, the proposed settlement procedure was as follows (at [77]–[84]):

The settlement scheme is to operate differently in respect of registrants who are under a disability within the meaning of O 15 of the Rules (O 15 registrants). There are eight O 15 registrants, and one late group member who would be an O 15 registrant if allowed to participate. Maurice Blackburn, as Administrator, is to appoint a personal representative for each O 15 registrant, who will represent them in the settlement process. Under the settlement scheme, Maurice Blackburn will conduct an initial assessment of whether an O 15 registrant is a group member as per the pleaded group definition, just as it would do in the assessment of any group member. However, unlike standard assessments, if Maurice Blackburn were to determine that an O 15 registrant is a group member, then the remainder of the assessment is to be conducted by independent counsel. An O 15 registrant can seek review by another independent member of counsel, in the same way that Independent Review is available for a standard registrant. However, the O 15 registrant must obtain leave from Maurice Blackburn before doing so, having already had his or her initial assessment conducted by independent counsel. The leave requirement is not onerous: Maurice Blackburn need only be of the opinion that it is ‘on the cards’ that the other independent review might produce a higher assessment value. Where an O 15 registrant is found not to be a group member, that O 15 registrant is able to seek a review of Maurice Blackburn’s decision by independent counsel, for which leave is not required. No further review would be available to that O 15 group member if independent counsel finds them not to be a group member. The time limits for O 15 group members are 42 days for each stage; longer than those for standard registrants. No bond is required to be paid for O 15 registrants in respect of the review process. For O 15 registrants, assessments are subject to approval by the Senior Master of the Court, who would have the benefit of any statement of reasons given in the assessment process and could require Maurice Blackburn to provide a report.

[page 123] Noting the above, Forrest J held that (at [165]): I am satisfied that the Scheme contains sufficient measures to address the vulnerabilities that O 15 registrants may have, such as the more extensive use of independent barristers, longer timeframes and the scheme for provision of materials to the Senior Master. I am also satisfied that these measures are not excessive as against the interests of other registrants: they are balanced, for instance, by the requirement that O 15 registrants must obtain Maurice Blackburn’s leave to obtain Independent Review, albeit at an appropriately low bar.

Having already noted his satisfaction with the fairness of the scheme generally, the options available to late registrants, the proposed reimbursement of lead plaintiff Ms Downie, and the review mechanism proposed, Forrest J ultimately held (at [9]): … that the resolution of the proceeding as proposed in the settlement deed and settlement scheme is in the interests of the group members as a whole and should be approved.

7.11

Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 (Gleeson CJ, Gaudron, Gummow, Kirby, Hayne and Callinan JJ)

Callinan J observed (at [160]): The effect of s 33F is that a person under a disability may be a member of a group (but not an active participant in group proceedings) without a litigation guardian.

7.12

Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678; [1999] FCA 104 (Finkelstein J)

Finkelstein J observed (at [22]): It is likely that included amongst the group members will be persons under disability. I am satisfied that this does not prevent the court approving a settlement under s 33V(1). Section 33F(1) provides that it is not necessary for a person under disability to have a next friend or committee merely in order to be a group member. In my view, s 33V(1) proceeds on the assumption that the representative proceeding which is to be settled or discontinued with the approval of the court is a proceeding where group members may be under disability. The settlement scheme makes specific provision for the protection of rights of persons under disability. It contemplates that each person under disability will be represented by some person who by law is entitled to act on his or her behalf or by a solicitor. It will be the obligation of the representative or solicitor to lodge a claim on behalf of the person under disability and there is every reason to assume therefore that all their claims will be properly made. This is an adequate protection in my opinion.

[page 125]

CHAPTER 8 Representative Proceedings Not to be Commenced in Certain Circumstances: s 33G • OVERVIEW • Section 33G has no continued application following the High Court’s decision in Re Wakim; Ex parte McNally (1997) 189 CLR 520; (1999) 163 ALR 270; [1997] HCA 25. The High Court in Re Wakim held that the jurisdiction conferred upon the Federal Court under cross-vesting legislation in respect of state law matters in which it did not otherwise have jurisdiction, was beyond legislative power and therefore invalid. Section 33G therefore does no more than express the state of the law as it now exists following the High Court’s decision. There are therefore no equivalent provisions in New South Wales or Queensland as those regimes were introduced following the High Court’s decision in Re Wakim.

• LEGISLATION • Section 33G, Federal Court of Australia Act 1976 (Cth) Representative proceeding not to be commenced in certain circumstances A representative proceeding may not be commenced if the proceeding would be concerned only with claims in respect of which the Court has

jurisdiction solely by virtue of the Jurisdiction of Courts (Cross-vesting) Act 1987 or a corresponding law of a State or Territory.

Section 33G, Supreme Court Act 1986 (Vic) Group proceeding not to be commenced in certain circumstances A group proceeding may not be commenced if the proceeding would be concerned only with claims in respect of which the Court has jurisdiction solely by virtue of the Jurisdiction of Courts (Cross-vesting) Act 1987 or a corresponding law of the Commonwealth or another State or a Territory.

[page 126]

• COMMENTARY • 8.1 The Federal Court has jurisdiction conferred on it by Federal Court of Australia Act 1976 (Cth) (Federal Court Act) s 19, which provides that the court has such original jurisdiction as is vested in it by the laws made by the parliament. The Federal Court also has accrued or attached jurisdiction to deal with a non-federal claim if it has before it a federal claim and, connected with that, a claim that is a non-federal claim which ‘arise(s) out of a common substratum of facts’: Philip Morris v Brown (1981) 148 CLR 457; 33 ALR 465 at 504 per Mason J, cited in Fencott v Muller (1983) 152 CLR 570; 46 ALR 41. 8.2 The Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) sought, among other things, to confer state jurisdiction on the Federal Courts. Section 33G was concerned with the non-federal jurisdiction purportedly conferred upon the Federal Court by the Jurisdiction of Courts (Crossvesting) Act 1987 (Cth) and corresponding state or territory laws. It provided that a representative proceeding could not be commenced if it was

concerned only with claims in which the court had jurisdiction solely by virtue of that Act. However, the High Court in Re Wakim; Ex parte McNally (1997) 189 CLR 520; (1999) 163 ALR 270; [1997] HCA 25, held that the jurisdiction conferred upon the Federal Court under cross-vesting legislation in respect of state law matters in which it did not otherwise have jurisdiction, was beyond legislative power and therefore invalid. Section 33G does not limit the Federal Court’s accrued or attached jurisdiction: see Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572 at [97]. 8.3 In Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; ATPR 41-759; [2000] FCA 229, Sackville J sitting as part of a Full Federal Court summarised the state of the law in relation to s 33G as follows (at [44]): A representative proceeding may not be commenced if the proceeding would be concerned only with claims in respect of which the Court would have jurisdiction solely by virtue of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) or a corresponding law of a State or Territory: s 33G. In Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 163 ALR 270, the High Court held the cross-vesting scheme to be invalid insofar as it involves State legislation which purports to confer jurisdiction on federal courts in respect of matters arising under State law. Thus s 33G states the position that would apply in any event.

[page 127]

• CASE LAW • 8.4

Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572 (Beaumont, French and Finkelstein JJ)

An explosion and fire occurred at the Longford Gas Plant in the state of Victoria on 25 September 1998. Following the explosion, gas supplies were unavailable to most consumers in the state of Victoria until 12 October 1998. The applicants, Johnson Tiles Pty Ltd, Douglas Chalmers and Gregory Alan Dean, were respectively a business user, a domestic user and a worker

stood down because of interruption of supply at his place of employment. Their claim was against Esso Australia Ltd and Esso Australia Resources Ltd (Esso) which own, operate and conduct the Longford Gas Plant. They say that as a result of misleading and deceptive conduct and negligence on the part of Esso, they and group members have suffered loss and damage arising from the interruption of gas supplies. The appeal focused on whether the federal claim on misleading conduct should be struck out and whether it was not bona fide but instead fabricated so as to attract the court’s jurisdiction to entertain the common law claim in negligence. The state entities who were the subject of a cross claim referred to s 33G in aid of an argument that the negligence claim could not be heard by the Federal Court. French J stated (at [96]–[97]): The State Entities submitted that if the claim under the Trade Practices Act were struck out the proceeding would not validly be constituted as a representative proceeding and ought not to proceed as such under Part IVA of the Federal Court of Australia Act. Section 33G of that Act was said to demonstrate a clear legislative intent that Part IVA can only be used where ‘… the original jurisdiction of the Court is enlivened (although once within the original jurisdiction) then the accrued jurisdiction can be relied upon’. The implicit assumption in s 33G was said to be that the Federal Court must have original jurisdiction. It did not matter that s 33G does not now have any operation in the light of Re Wakim. Its existence demonstrated the clear legislative intent. The use of the term ‘original jurisdiction’ in the submission appears to have been intended as a reference to jurisdiction to deal with the federal claim. That usage misconceives the nature of federal jurisdiction and suggests a dichotomy which is contrary to its constitutional foundations and the principles derived there from. To understand the way in which the point is advanced it is necessary to refer to s 33G which provides: 33G. A representative proceeding may not be commenced if the proceeding would be concerned only with claims in respect of which the Court has jurisdiction solely by virtue of the Jurisdiction of Courts (Cross Vesting) Act 1987 or a corresponding law of a State or Territory.

[page 128] It can immediately be seen that the section is concerned not with the exercise of federal jurisdiction by the Court but the non-federal jurisdiction purportedly conferred upon it by the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) and corresponding State or Territory laws. That purported conferral of jurisdiction was found in Re Wakim to be invalid. Whether it were or not, the

provision has nothing to say about the exercise of federal jurisdiction albeit that jurisdiction may extend to a non-federal claim comprising part of the matter in which a federal claim is brought before the Court. There is no basis in s 33G for denying jurisdiction to the Court to proceed with this application as a representative proceeding under Part IVA.

8.5

Cook v Pasminco Ltd (2000) 99 FCR 548; [2000] FCA 677 (Lindgren J)

Representative proceedings were commenced on behalf of a group of owners and occupiers of property situated within a five-kilometre radius of lands occupied by the respondents at Port Pirie (SA) and Cockle Creek (NSW). The applicants pled causes of action in negligence and nuisance and two statutory causes of action under Trade Practices Act 1974 (Cth) ss 75AD and 75AG. The respondents challenged the claims made under the Trade Practices Act which also had the effect that the Federal Court lacked jurisdiction to entertain the common law causes of action in negligence and nuisance. Lindgren J upheld the respondents’ challenge. Lindgren J also observed (at [34]): From the applicants’ viewpoint it will be thought unfortunate that they do not have access to the procedure which they have chosen, namely, that of the Representative Proceeding which is provided for in Pt IVA of the Federal Court of Australia Act 1976 (Cth) and O 73 of this Court’s rules. Applying legal principle, however, I think it clear that the applicants’ case is doomed to fail so long as it remains in this Court. It is better that this be determined to be the case now rather than later when legal costs have increased.

[page 129]

CHAPTER 9 Pleading Requirements and Commencement of Proceeding: s 33H • OVERVIEW • Section 33H sets out procedural (pleading) requirements relating to the commencement of a representative proceeding. The federal and state legislative regimes are relevantly identical.

• LEGISLATION • Section 33H, Federal Court of Australia Act 1976 (Cth) Originating process (1) An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included: (a) describe or otherwise identify the group members to whom the proceeding relates; and (b) specify the nature of the claims made on behalf of the group members and the relief claimed; and (c) specify the questions of law or fact common to the claims of the group members. (2) In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number

of, the group members.

Section 33H, Supreme Court Act 1986 (Vic) Originating process (1) A group proceeding must be commenced by writ. (2) The indorsement on the writ must, in addition to any other matters required by the Rules to be included— (a) describe or otherwise identify the group members to whom the proceeding relates; and [page 130] (b) specify the nature of the claims made on behalf of the group members and the relief claimed; and (c) specify the questions of law or fact common to the claims of the group members. (3) In describing or otherwise identifying group members for the purposes of subsection (2), it is not necessary to name, or specify the number of, the group members.

Section 161, Civil Procedure Act 2005 (NSW) Originating process (1) The originating process in representative proceedings, or a document filed in support of the originating process, must, in addition to any other matters required to be included: (a) describe or otherwise identify the group members to whom the proceedings relate, and (b) specify the nature of the claims made on behalf of the group

members and the relief claimed, and (c) specify the question of law or facts common to the claims of the group members. (2) In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members.

Section 103F, Civil Proceedings Act 2011 (Qld) Originating process (1) The originating process for a representative proceeding, or a document filed in support of the originating process, must, in addition to any other matters required— (a) describe or otherwise identify the group members to whom the proceeding relates; and (b) state the nature of the claims made and relief sought on behalf of the group members; and (c) state the questions of law or fact common to the claims of the group members. (2) For describing or otherwise identifying the group members under subsection (1)(a), it is not necessary to name or state the number of the group members.

[page 131]

• COMMENTARY • 9.1 A clear articulation of the claims made on behalf of group members in the pleadings is important for a number of reasons. First, s 33H(1) supports s 33C(1), principally because it facilitates an

assessment by the court about whether the threshold requirements specified within s 33C(1) have been satisfied. In Bright v Femcare Ltd (2002) 195 ALR 574, Kiefel J observed (at [126]): … It follows, in my view, that a determination as to whether the requirements of s 33C(1) have been met is to be made by reference to the pleading or other document in which the claims of the applicant and the group members are made. Section 33H(1) is intended to facilitate that assessment.

Second, it enables group members to understand the nature of the case being made on their behalf so that they can form a view about whether they wish to opt out of the proceedings. Third, because a representative proceedings is only representative to the extent of its commonality (see Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11) it is important for group members to understand the extent to which their claims are being advanced in the group proceeding. Finally, like pleadings in any other form of litigation, a representative proceeding pleading enables a respondent to understand the nature of the case being alleged against it. 9.2 The Federal Court Practice Note GPN-CA Class Actions relevantly provides: 3. Commencement of Class Action Proceedings 3.1 A class action is to be commenced by filing an originating application in accordance with Form 19. The originating application, statement of claim (Form 17) or affidavit (Form 59) filed in support of the application must, in accordance with s 33H of the Federal Court Act: (a) describe or otherwise identify the class members either by name or characteristic; (b) specify the nature of the claims and the relief claimed by the applicant on its own behalf and on behalf of the class members; and (c) specify the common questions of law or fact which are said to arise in the action. It will usually be the case that the concise statement pleadings process contemplated by the Central Practice Note and the Commercial and Corporations Practice Note will be inappropriate for use in class actions. 3.2 The statement of claim should be drawn so that the applicant’s personal claim can be used as the vehicle for determining the common questions in the action. Ordinarily the trial of the action will be aimed at resolving all common questions together with any noncommon questions raised by the applicant’s personal claim (eg. the applicant’s individual claim for damages).

[page 132] 9.3 Guidance in other jurisdictions is provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [4]; the Supreme Court of New South Wales Practice Note SC Gen 17 — Supreme Court Representative Proceedings at [4]; and the Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings at [5].

Group Description or Identification 9.4 The Federal Court of Australia Act 1976 (Federal Court Act) s 33H(1) (a) requires that the originating process describe or otherwise identify the group members on whose behalf the representative proceeding has been commenced. It is not necessary to name the group members nor specify the number of group members: see Federal Court Act s 33H(2). The importance of describing or identifying the group members on whose behalf the proceedings has been commenced was explained by Sackville J in Petrusevski v Bulldogs Rugby League Ltd [2003] FCA 61 at [19]–[23]: One reason, as the High Court observed in Wong v Silkfield, is to enable the Court to determine whether the requirements of s 33C have been satisfied. Unless the group member is adequately described or identified (although not necessarily named or counted: s 33H(2)), it may be difficult to ascertain, for example, whether the claims of all the group members give rise to a substantial common issue of law or fact. Another reason for describing or identifying group members is to enable group members to decide whether or not to opt out of the representative proceeding pursuant to s 33J(2) of the Federal Court Act. If a person who is a group member does not opt out of the proceedings he or she will be bound by the judgment. (Section 33ZB requires the judgment in a representative proceeding to ‘describe or otherwise identify the group members who will be affected by it’ and provides that the judgment binds any such persons other than any person who has opted out.)

The importance of this requirement has led to some debate about the manner in which the group is described or identified. The group definition is about describing the persons represented in the claim. Group member claims and causes of action do not need to be included

in the description. In Caason Investments Pty Ltd v Cao (2015) 236 FCR 322, Gilmour and Foster JJ held (at 83): The Group Member definition required by FCA Act s 33H for the purposes of the representative proceeding is, as the applicants submit correctly, in effect, simply a list of persons named by identity or by reference to identifiable characteristics. We accept the applicants’ submission that it has nothing to do with the substantive claim or cause of action of a Group Member.

[page 133] At its simplest, a person must be able to ascertain from the description of the represented group whether or not he or she is a member of that group: see Cook v Pasminco Ltd [2000] VSC 534 at [59]; Petrusevski v Bulldogs Rugby League Ltd at [20]–[22]. Because representative proceedings can be commenced as either an ‘optout’ or ‘closed’ class, different techniques for describing the group have been used. (a) The opt-out class action model is commenced without the express consent of the absent class members. All those entities that fall within the group definition are automatically part of the class action but the members are subsequently afforded an opportunity to exclude themselves from the proceedings. (b) The closed class approach involves a class action being commenced on behalf of a group specifically created for, and prior to, the commencement of the class action. 9.5 The way in which the representative group is defined varies between proceedings. Examples of group definitions are included in the Case Law section below. 9.6 Not all group definitions will satisfy the requirements of s 33H(1)(a). While a particular group definition must describe the group, s 33H(1)(a) must be read in conjunction with the other provisions of Pt IVA. In Bray v F Hoffman-La Roche Ltd [2002] FCA 1405, Merkel J criticised a pleading which

defined the represented group to include, in effect, all persons who, over a seven-year period, had purchased certain vitamins in Australia. His Honour expressed the view (at [29]) that the definition did not adequately describe or identify the group members. As he asked rhetorically, to whom was notice to be given under Federal Court Act s 33X (which requires group members to be given notice of certain matters)? In Petrusevski v Bulldogs Rugby League Ltd, Sackville J observed (at [23]): Clearly enough, not every description or identification of the represented group will satisfy the requirements of s 33H(1)(a) of the Federal Court Act. A useful, although not necessarily exhaustive test, is whether the description is such as to enable a person, with the assistance of a legal adviser if necessary, to ascertain whether he or she is a group member. If the description incorporates a reference to conduct alleged in the pleadings, a person or his or her adviser ought to be able, by reading the description and the relevant portion of the pleadings, to determine whether he or she is a member of the represented group. If a person cannot reasonably be expected to do this, the definition is unlikely to satisfy the requirements of s 33H(1)(a). [Emphasis added]

The fact that potential group members may need to make inquiries to determine whether or not they are group members does not deprive a group definition of the objective criteria by which group membership can be ascertained: see Wright [page 134] Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85 at [34] per Moore J (with whom Jessup and Dodds-Steeton JJ agreed).

Open or Closed Class 9.7 In enacting Pt IVA, a deliberate policy choice was made to introduce an ‘opt-out’ regime. The Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) (ALRC Report) discussed the competing approaches of an opt-in or opt-out regime: see [98]–[130]. In particular, the ALRC Report stated (at [126]–[127]):

A fair balance will be struck between the interests of group members and respondents if proceedings can be commenced without the consent of group members as long as notice is given to group members and they have an opportunity to withdraw from the proceedings or litigate individually. The respondent’s ultimate liability should not, generally speaking, extend beyond those group members who can be identified and prove their claim. Recommendation. Subject to the provision of appropriate protection, it should be possible to commence a group member’s proceeding without first obtaining the consent of that group member. Provision should be made to ensure that group members are notified of the proceedings and that a group member can discontinue his or her proceeding or continue it independently. The rights of persons should not be prejudiced by the commencement of proceedings without consent. [Footnotes omitted]

9.8 The Attorney-General stated in the Second Reading Speech (at 3175): The area of concern to business appears to be whether persons having relevant claims against the respondent should be included in the group covered by the proceedings unless they choose to opt out or whether all such persons should have to take a positive step to be included, that is, to opt in. The Government believes that an opt out procedure is preferable on grounds both of equity and efficiency. It ensures that people, particularly, those who are poor or less educated, can obtain redress where they may be unable to take the positive step of having themselves included in the proceedings. It also achieves the goals of obtaining a common, binding decision while leaving a person who wishes to do so free to leave the group and pursue his or her claim separately.

With that policy choice, many early representative proceedings were pursued as ‘opt-out’ representative proceedings. Class actions could be commenced on behalf of all group members, and if they did not want to be a part of the claim, they were given a chance to opt out of the litigation. However, with the advent of litigation funding, and the desire to avoid ‘free-riders’, attempts were made to pursue claims as a ‘closed group’. [page 135] The first attempt to do so failed. In Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394 (Dorajay), Stone J considered the following group definition (at [125]): The proceeding is commenced by the Applicant on its own behalf and on behalf of the other

person for whom the solicitors for the Applicant have instructions to act at any particular time, who at some time during the period between 20 September 2002 and 26 May 2003 inclusive … acquired an interest in shares in Aristocrat and who suffered loss and damage by or resulting from the conduct of Aristocrat referred to below.

Stone J held that the above definition, which restricted group members to persons who actively opted in to proceedings by instructing the applicant’s solicitors, MBC, was impermissible (at [117]–[126]): There are at least two valid grounds of objection to the MBC criterion. First, rather than being able to be a member of the group without taking any positive step … a person is required to opt in to the group by retaining MBC. The fact that an opt out procedure would still be required is not to the point. The legislature made a clear choice that was consistent with the recommendation of the ALRC on this issue (see [107] above). Whatever advantages, real or apparent, may flow from the ability to identify each member of the class at the outset, a decision to apply an opt in procedure can only be made by the legislature. … In summary, I find that the requirement that group members opt in to the proceeding to be inconsistent with terms and policy of Part IVA. It is inappropriate that the proceeding continue under Part IVA while the MBC criterion is part of the description of the representative group. I also find that, in the way in which the MBC criterion subverts the opt out process, it is an abuse of the Court’s processes as established by Part IVA. The second, perhaps even more fundamental, objection to the MBC criterion is that it dictates who should represent group members. I find it an extraordinary proposition that the definition of the representative group should be used to confine a representative group to the clients of one solicitor, however narrowly the group is otherwise defined. In my view there is no support in principle or authority for this proposition and it is repugnant to the policy of the Act.

9.9 However, approximately two years later in Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 (Multiplex), the Full Court of the Federal Court revisited the position with respect to the closed class or ‘opt-in’ approach to representative proceedings: see [141]–[142]. In those proceedings, the Full Court considered a group definition which included a requirement that group members had executed a litigation funding agreement with International Litigation Funding Partners Inc (ILF) at the time the proceedings were commenced. The Full Court had the task of determining

[page 136] whether this was an ‘opt-in’ requirement, and if so, following the precedent of Dorajay, whether that group definition was impermissible. The Full Court noted (at [17]–[19], [142]) that a group definition allowing a person to opt in after the commencement of the proceeding would be inconsistent with Pt IVA as: The expression ‘opt in’, or any derivative of it, is not used in Pt IVA. Opting in to a Pt IVA proceeding already on foot would be inconsistent with one or more of ss 33C, 33H, 33J and 33K of the Act … It is a somewhat loose use of language to speak in this case of opting into the represented group before the proceeding was commenced. … … certain difficulties would arise if practical disincentives to opt out were allowed to defeat a group definition. There will almost inevitably always be some disincentive for a group member to opt out, at least once the proceeding has advanced. There is the disincentive that arises from the simple fact that the solicitors retained have been pursuing the claimant’s interest — a benefit will be lost by an opting out.

9.10 However, while consent to bring an action (that is, a closed class or opt-in proceeding) is not required, it is also not forbidden. The extent to which it is permitted appears to be limited to circumstances where the group is known and ascertainable at the commencement of the proceedings. In Multiplex, the court observed (at [142]): Senior Counsel for Dawson accepted that a post-commencement right to opt in [is] not permissible. However, no such question arises in the present case because the third element of the definition restricts the class to persons who have entered into the funding agreement at the commencement of the proceeding.

Jacobson J held (at [53]–[60]) that a number of provisions of Pt IVA must be considered in light of the issues raised by the appeal, including: (a) s 33H(1), which provides that an application commencing a representative proceeding must describe or identify the group members and specify the nature of the claims as well as the common questions of fact or law; (b) s 33E(1), which provides that subject to a number of limited exceptions

in s 33E(2), a person does not need to consent to be a group member in a representative proceeding; and (c) s 33J, which contains the entitlement of group members to opt out of a representative proceeding by written notice given under the Rules of Court before the date so fixed. 9.11 As Stone J observed in Dorajay (at [110]), it is plain from the terms of ss 33E and 33J that parliament deliberately adopted the ‘opt-out’ procedure for [page 137] representative proceedings under Pt IVA. In Multiplex, the plaintiff submitted that the group definition in those proceedings, which requires the parties to take the positive step of entering into a funding agreement with ILF, is inconsistent with the ‘opt-out’ model: at [134]–[135]. The Full Court held that whether the group definition is inconsistent with Pt IVA cannot be determined by ‘broad arguments’, but rather, whether it is inconsistent with s 33C, s 33E or s 33J. Jacobson J saw nothing in the language of those provisions, construed in the context of the whole of Pt IVA, which precludes the group definition used in Multiplex: at [138]–[141]. Therefore, his Honour held that Dorajay was correctly decided, but did not dictate the result of Multiplex: at [171]. The Multiplex parties also argued that the group members were not completely free to opt out of proceedings, because they would remain liable to pay the ‘resolution sum’ to the applicant’s solicitors. Jacobson J held that regardless of this potential practical disincentive, the ‘plain fact’ is that the group members are still entitled to opt out. The fact that the conditions of the funding agreement operate as a practical disincentive to a group member exercising the right to opt out of the proceeding does not mean that the group definition contravenes s 33J: at [1], [147], [150]. 9.12 While a group definition that allows a person to ‘opt in’ after the commencement of proceedings would be inconsistent with Pt IVA, there is

nothing in Pt IVA that precludes a definition of a group which restricts the class to persons who have entered into a litigation funding agreement at the commencement of the proceeding: at [141]–[142]. As such, it is not for the court to determine questions of inappropriateness or inefficiency by reference to policy considerations that are not expressed or apparent from the language and scheme of Pt IVA: at [1], [35], [118]–[122]. Therefore, the position, as clarified by the Full Federal Court in Multiplex, is as follows: (a) It is not permissible to define the group as including only clients of one law firm (or presumably also those who retain a particular litigation funder) where the group members retain that law firm (or funder) after commencement of the class action, as this effectively requires potential group members to ‘opt in’ to the proceeding; but (b) It is permissible to restrict the group to those who enter a funding arrangement with a particular litigation funder (and/or those represented by a particular firm of solicitors) prior to commencement of proceedings, as this does not offend the ‘opt-out’ policy of Pt IVA. See also Watson v AWB Ltd [2009] FCA 215 at [23]–[24] and Larrson v Wealthsure Pty Ltd [2013] FCA 926. In Victoria, in Matthews v SPI Electricity (Ruling No 13) (2013) 39 VR 255; [2013] VSC 17 at [11], it was observed that ‘[i]t is now established that it is not [page 138] necessary for the class to cover all persons who have suffered loss or damage as a result of a particular event (or act or omission)’. Forrest J defined a ‘closed class’ (at [20]), as ‘a class composed of a limited or identified number of persons rather than all those who suffered loss or damage as a result of the conduct of a defendant’. His Honour also recorded that since the Full Court of the Federal Court decision in Multiplex, closed class definitions had been

used in Victoria, especially in shareholder class actions, on a number of occasions. For further discussion on the closed class debate, see Peter Cashman, ‘Class Actions on Behalf of Clients: Is this Permissible?’ (2006) 80 (11) Australian Law Journal 738; Vince Morabito, ‘Class Actions Instituted only for the Benefit of the Clients of the Class Representative’s Solicitors’ (2007) 29(1) Sydney Law Review 5; Michael Legg and Louisa Travers, ‘Necessity is the Mother of Invention — The Adoption of Third Party Litigation Funding and the Closed Class in Australian Class Actions’ (2009) 38(3) Common Law World Review 245; Michael Legg, ‘Funding a Class Action through Limiting the Group: What does Part IVA of the Federal Court of Australia Act 1976 (Cth) Permit?’ (2010) Australian Bar Review 17. While defining the group in a way that would enable it to expand after the commencement of proceedings is impermissible, there are practical solutions which have been deployed. The group definition can always be amended pursuant to s 33K: see Chapter 11. Provided due regard is had to the effective commencement date for added group members for the purposes of ascertaining limitation periods (see Chapter 31), group definitions have been amended after the commencement of proceedings to enable new group members to be added. An example of this arose in City of Swan v McGrawHill Financial Inc (2014) 223 FCR 328, when the applicants sought to change the description of group members under s 33K after the proceeding had commenced, to include those who ‘after the commencement of these proceedings but prior to the date of filing the Amended Statement of Claim, entered into a litigation funding agreement with IMF’. Rares J allowed this, provided that the amendment (at 13): … closes the newly described class or identifies an already closed class in the same way as occurs when proceedings under Pt IVA initially are commenced.

In this regard, the amendment was only allowed due to the fact that the class became closed again as soon as it was implemented. Therefore, the applicants’ additional request for further time between the court’s approval of the amendment and actually filing the amended application, was refused as (at [15]–[16]): To allow that delay would be the very kind of action described in the authorities as

permitting people to opt in. Those persons would know that the Court had ordered that the description of the group members may be changed on a future date and would thus be given the option of deciding whether or not they now wish to join.

[page 139] The alternative would be to simply commence a new representative proceeding on behalf of another closed group.

Claim and Relief Specification 9.13 The Federal Court Act s 33H(1)(b) requires that the originating process specify the nature of the claims made on behalf of the group members as well as the relief being claimed (see s 33C (Chapter 4) for further discussion of what is meant by ‘claims’). This specification requirement facilitates two particular assessments: first, an assessment by the court as to whether the threshold requirements of s 33C(1) have been satisfied (particularly s 33C(1)(b)); and second, an assessment by each group member as to whether he or she wishes to opt out of the representative proceeding having regard to the nature of the claims being advanced on behalf of group members. Numerous authorities have considered the role of the pleadings in representative proceedings. From these authorities, a number of general principles can be distilled: Nothing in Pt IVA abrogates the normal pleading rules: Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 at [136]; Williams v FAI Home Security Pty Ltd (No 2) [2000] FCA 726 at [16]. However, a level of generality is permissible in pleadings for representative proceedings, with the acceptable level of generality being dependent upon the particular circumstances of each case: Philip Morris (Australia) Ltd v Nixon at [131]–[136]. See further discussion below. In any proceeding, including a Pt IVA proceeding, the pleadings (including an application) define the issues for determination in the litigation and thereby enable the relevance and admissibility of evidence

to be determined at the trial: Dare v Pulham (1982) 148 CLR 658 at 664; Banque Commerciale SA v Akhil Holdings (1990) 169 CLR 279 at 286; Philip Morris (Australia) Ltd v Nixon at [131]. An applicant must adequately plead their own case as well as the case alleged on behalf of all group members: Philip Morris (Australia) Ltd v Nixon at [45]; Hunter Valley Community Investments Pty Ltd v Bell (2001) 46 ATR 375 at [33]. However, the fact that Federal Court Act Pt IVA preserves the ordinary rules of pleading in representative proceedings does not necessarily mean that the representative party in such proceedings is bound to plead material facts specific to each individual member of the represented class: Philip Morris (Australia) Ltd v Nixon at [119] per Sackville J. The pleadings must demonstrate the basis upon which the procedures in Pt IVA are said to be available, that is, whether the threshold requirements in s 33C(1) have been met: Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [65]; Philip Morris (Australia) Ltd v Nixon at [45]; Cameron v Qantas Airways Ltd (1993) ATPR ¶41-251 at 41,370. [page 140] It follows that the pleadings must clearly articulate the rights of the group members (and how those rights are alleged to arise) so that a court may be satisfied that it is appropriate for the proceedings to be dealt with under Pt IVA: Harrison v Lidoform Pty Ltd (rec & mgr apptd) (FCA, Hely J, 24 November 1998, unreported) at 14. Pleading a proper (and complete) case on behalf of group members achieves other purposes. The pleadings must allow a potential group member to ascertain whether or not they are a member of the represented class: Petrusevski v Bulldogs Rugby League Ltd at [36]. The pleadings must be precise enough to allow class members to know the case being brought on their behalf so that they may decide whether they wish to opt out of proceedings: Harrison v Lidoform Pty Ltd (rec & mgr apptd) at 14. The pleadings must enable the respondent (from the outset of proceedings) to adequately understand the case made on behalf of the

represented class and provide a fair opportunity to meet that case: Philip Morris (Australia) Ltd v Nixon at [136]; Williams v FAI Home Security Pty Ltd (No 2) at [16]; Cameron v Qantas Airways Ltd at 41,370.

Generality of Pleading 9.14 There has been much discussion about the degree of generality that is permitted in pleading representative proceedings. It is uncontroversial that it is acceptable to plead with a level of generality in representative proceedings. Indeed, without such flexibility the purpose of Pt IVA would be curtailed: Philip Morris (Australia) Ltd v Nixon at [131]–[134]. While the acceptable level of generality will be particular to the circumstances of each case, a complete cause of action must be pleaded in all cases. Nothing in Pt IVA absolves the applicants of their obligation to adhere to normal pleading requirements, and therefore the requirement to plead a complete cause of action: Philip Morris (Australia) Ltd v Nixon at [129], [131]–[133]; Williams v FAI Home Security Pty Ltd [1999] FCA 1771 at [16]. With regard to pleadings in this context, Sackville J said in Philip Morris (Australia) Ltd v Nixon at [133], [136]: … it may be sufficient [to enable the applicant to resist an application to strike out the proceedings or dismiss the proceedings] for the applicant to plead the case of each member of the represented class at a high level of generality. … Whether proceedings at a relatively high level of generality are permissible will depend on the circumstances of the particular case and the stage it has reached. The facts material to the claims of each member of the represented group might not be necessary to ensure that the respondent adequately understands the case made on behalf of the represented class and has a fair opportunity to meet that case. This may be the position, for example, where representative proceedings

[page 141] are brought in order to provide a mechanism to enable one or more common issues of law or fact to be resolved in a manner that binds the respondent and all class members, rather than to determine finally the claims of each class member: see Federal Court Act ss 33Q, 33R.

9.15 In Bright v Femcare Ltd (1999) 166 ALR 743; [1999] FCA 1377 at [18], Lehane J stated: There is nothing in Pt IVA which dispenses with the requirement that the applicant plead the material facts on which all claims for relief are made on behalf of each group member. To the extent that that is not done the pleading, like a pleading in any other proceeding, is liable to be struck out. Equally, if a claim made on behalf of any group member is to succeed, the factual basis of each element of the cause of action will have to be established by evidence.

Similarly, Hely J in Harrison v Lidoform Pty Ltd observed (at 14): A representative party may be able to enforce the rights of others in a proceeding brought under Part IVA but the statement of claim needs to identify what the rights of those represented are claimed to be and how they are said to arise. In my view this is necessary in order to give definition to the proceedings, and to expose the issues for determination in the proceedings. It is also necessary that class members know with some precision the nature of the case which the applicant seeks to bring on their behalf so that they can decide, in terms of s 33J, whether to opt out of a claim formulated in that way. A judgment given in a representative proceeding binds all group members other than persons who have opted out: Section 33ZB of the Federal Court of Australia Act 1976. Whilst the amended statement of claim remains in its present form, one simply does not know to what it is that group members are bound. The applicant points to ss 33Q, 33R, 33S and 33ZF as mechanisms by which orders can later be made so as to expose and determine the issues which will arise in the proceedings. On this approach, the issues in the case, insofar as it is a representative action, will emerge by some means other than the pleadings. I do not think that Pt IVA of the Act was intended to operate in this way.

Young J in Cadence Asset Management Pty Ltd v Concept Stores (2006) ACSR 435 at [37] further held: But, whatever level of generality is adopted in the statement of claim, it must adhere to the basic principle that the purpose of pleadings is to define the issues and thereby inform the parties in advance of the case they have to meet and so enable them to take steps to deal with it … On the other hand, a pleading will infringe the applicable practice rules if it contains nothing more than broad conclusions asserted at such a high level of generality that the opposite party cannot understand the case it has to meet.

[page 142]

Commencement of Proceedings and Shape of

Trial 9.16 Section 33H is concerned with the commencement of representative proceedings. While the pleading must specify the (complete) nature of the claims made on behalf of group members, and s 33H(1)(c) requires specification of common questions which are said to arise for determination, the shape of a trial and the specific questions to be determined at that trial are usually not determined until after the interlocutory stages.

Common Questions Specification 9.17 Section 33H(1)(c) requires that the originating process specify the questions of law or fact common to the claims of the group members. A ‘common question’ is a question that when answered in the applicant’s claim can also fulfil the purpose of answering the question in the claims of the represented parties (other group members): see the discussion in s 33C (Chapter 4). In a conventional proceeding, a court adjudicates upon a claim by determining all issues at a single trial, unless an order is first made for nominated questions to be the subject of a separate or preliminary determination. Before making such an order, however, the court needs to identify the proposed preliminary questions with precision and satisfy itself that the determination of those questions will be of utility in the litigation. The importance of complying with this requirement was noted in Bright v Femcare (2002) 195 ALR 574, where Lindgren J noted (at [14]): The failure of the pleading to comply with s 33H(1)(c) made the primary judge’s task difficult. Careful compliance with this requirement is of the greatest importance. Its purpose is to elicit the identity of questions, the answering of which in the representative party’s claim can be expected also to perform the useful purpose of answering them in the claims of the represented parties. In my opinion, the identification and formulation of common issues calls for care and attention of the same kind as does the identification and formulation of a separate question for the purpose of O 29 r 2 of the [Federal Court] rules.

9.18 As noted above, s 33H is concerned with the requirements at the commencement of proceedings. While s 33H(1)(b) requires that claim to be pled in its entirety, and s 33H(1)(c) requires common questions to be

specified, it will only be those aspects of those claims which are truly common with the lead applicant’s case which will be determined at the initial trial. This is recognised in the Federal Court Practice Note GPN-CA Class Actions, which relevantly provides: 3.2 The statement of claim should be drawn so that the applicant’s personal claim can be used as the vehicle for determining the common questions in the action. Ordinarily the trial of the action will be aimed at resolving all common questions together with any noncommon questions raised by the applicant’s personal claim (eg. the applicant’s individual claim for damages).

[page 143] 9.19 It is important to clearly articulate the questions of law and fact that are common questions to be answered in a proceeding because, as the High Court observed in Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11 at 103: … the proceeding can only be representative to the extent of the commonality.

In a prior unsuccessful representative proceeding involving the same parties, 33 common questions were answered and dismissed by Judd J: WoodcroftBrown v Timbercorp Securities Ltd (2011) 253 FLR 240 at 258 [75], [77]. In the subsequent proceeding, Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11, the respondents attempted to raise individual defences against the claims of Timbercorp Finance. The appellant argued that Anshun estoppel precluded the defences being raised (at 40): … the representation of group members’ interests by a lead plaintiff in a group proceeding is not limited to the legal interest in the common questions in that proceeding. It submits that group members, such as the respondents, are privies in interest of the lead plaintiff not only with respect to the claims pleaded in that proceeding, but also with respect to unpleaded claims of individual group members that should have been raised. It would follow that if the lead plaintiff in that proceeding did not bring forward those claims for determination, the group members will be unable to pursue them later.

The High Court dismissed these arguments, determining that while group

members remain undoubtedly bound by the determination of claims pursued in the common questions within a proceeding (at 54): … the representative capacity of a plaintiff in a group proceeding is limited to the claims giving rise to common questions.

9.20 In Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26, Moore, Sundberg and Tracey JJ considered an appeal by Merck Sharp & Dohme following the trial judge’s decision not to make an order under s 33ZF requiring Mr Peterson to specify the matters that the court would be invited to determine for the group members. That is, even though the statement of claim specified the common questions at the commencement of the proceedings, there remained uncertainty about the common issues the court was being asked to determine at the trial. Their Honours considered the trial judge’s reasoning, stating (at [5]–[6]): The difficulty with this approach is that the pleadings allege that Merck is liable in damages and for compensation in relation to Mr Peterson and all members of the group. [However] it was common ground … that the ‘trial’ scheduled to commence shortly will not involve determination of liability concerning, and any damages or compensation payable to, anyone other than Mr Peterson. Plainly, the ‘trial’ will not involve a determination of all issues raised in the pleadings.

[page 144] In our opinion it is desirable, if not necessary, to identify precisely what issues will be determined in the ‘trial’ (and those that will not be determined) on the assumption, which the parties did not gainsay, that at the end of the ‘trial’ orders will be made which reflect the determination made by the trial judge on both questions of fact and law or mixed questions of law. Also, common issues can be determined. There is plainly a controversy about which issues are common. Merck disputes that the issues pleaded in Mr Peterson’s statement of claim are, in truth, common questions. However, it is tolerably clear that the scheme of Pt IVA of the Federal Court Act is that whilst a proceeding continues as a representative proceeding, the Court should, in the ordinary course (at least in relation to proceedings involving sizable group where liability may depend on each member’s individual circumstances), initially deal with issues that are common to all members of the representative group or a sub-group of that group … It seems to us that given that there is controversy about what are the common issues, it would be desirable to structure the ‘trial’ by identifying what might be the common issues for

determination, though on the footing that if it became apparent from the evidence and the submissions that they were not common, they would not then be determined lest they be ‘an issue that relates to the claims of [one particular] member’.

9.21 Specifying the common questions of law and fact is also important to ensure that the court is not engaging in an impermissible ‘hypothetical inquiry’. Federal Court Act Pt IV does not authorise the determination of hypothetical questions just because there may be difficulties in determining whether there are questions that are truly common to the claims of all group members. This particular issue was explored in depth in Femcare v Bright (2000) 100 FCR 331, where, under the heading ‘Reading on hypothetical questions’, the court observed (at [105], [107]): A proceeding will not be within Pt IVA unless the claims that are asserted give rise to a substantial common issue of law or fact. If that prerequisite is not satisfied, the question of a proceeding under Pt IVA cannot arise. In order to ascertain whether the prerequisite is satisfied, it will be necessary for the Court to undertake a careful analysis of the matters included, pursuant to s 33H, in an application or other document filed in support of an application in order to isolate the common questions of fact or law. The determination of those questions, properly formulated is not the determination of a hypothetical question. It is, ex hypothesi, a determination of a true question that arises in respect of each group member’s claim. … If it is not possible to formulate a satisfactory question that arises for all group members, then either s 33C has not been satisfied in the first place, or the proceeding should, pursuant to s 33N, no longer continue under Pt IVA. In other words, Pt IVA is not to be construed as authorising the determination of a hypothetical question just because there may be difficulties, in any given proceeding, in determining whether there are indeed questions that are common to the claims of all group members.

[page 145]

• CASE LAW • 9.22

Petrusevski v Bulldogs Rugby League Ltd [2003] FCA 61 (Sackville J)

Bulldogs Rugby League Club Ltd (the respondent) filed a motion seeking to strike out the applicants’ further amended application and further amended statement of claim on the basis that neither of these pleadings satisfied Federal Court Act s 33H(1)(a). The representative proceedings, which were commenced under Federal Court Act Pt IVA, involved a decision to strip the respondent of its competition points on the basis that the sporting club breached a specified salary cap. It was asserted that the applicants and the represented group placed wagers on the outcome of the sporting competition based on the respondent’s misleading conduct and as a result suffered loss when the respondent was stripped of its competition points. After having carefully considered the applicants’ further amended application and further amended statement of claim, Sackville J held that the applicants’ pleadings ought to be struck out on the basis that neither adequately described or otherwise identified the group members to whom the proceedings relate (as required by s 33H(1)(a)). In reaching that decision, Sackville J was particularly swayed by the inability of a person to determine whether or not they were a group member and noted (at [31]–[32]): In this case, however, some persons who have suffered losses as the result of Wagers are likely to have great difficulty in determining whether they are within the represented group. A person may well be left uncertain as to whether he or she has been induced to place a Wager by conduct described in such vague and uncertain terms as subpara 7(b), subpara 7(c) and subpara 7(d) [being pleadings which described the manner in which the misleading conduct was implied, including, for example, the respondents conducting of regular and frequent media relations on behalf of the team] … … How is the person (or his or her advisor) to know whether that particular item [being an implication that the respondent was eligible to field a team in the relevant competition] was the product of the respondent’s ‘regular and frequent media relations’ without knowing what is meant by that phrase?

9.23

Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005)147 FCR 394; 67 IPR 124; [2005] FCA 1483 (Stone J)

A detailed summary of the facts of this case is available in s 33J (Chapter 10). For the purpose of this section, s 33H, it is sufficient to note that in

Dorajay the description of the representative group was restricted to persons who agreed to instruct Dorajay’s (the applicant’s) solicitors, Maurice Blackburn Cashman (MBC), pursuant to the terms of a retainer agreement. More specifically, the representative group was described as follows (at 3): [page 146] The proceeding is commenced by the Applicant on its own behalf and on behalf of the other person for whom the solicitors for the Applicant have instructions to act at any particular time, who at some time during the period between 20 September 2002 and 26 May 2003 inclusive … acquired an interest in shares in Aristocrat and who suffered loss and damage by or resulting from the conduct of Aristocrat referred to below.

After carefully considering the description of the representative group, Stone J held (at [117]): There are at least two valid grounds of objection to the MBC criterion. First, rather than being able to be a member of the group without taking any positive step (as envisaged in the Attorney-General’s comments quoted at [106] above) a person is required to opt in to the group by retaining MBC. The fact that an opt out procedure would still be required is not to the point. The legislature made a clear choice that was consistent with the recommendation of the ALRC on this issue (see [107] above). Whatever advantages, real or apparent, may flow from the ability to identify each member of the class at the outset, a decision to apply an opt in procedure can only be made by the legislature. … In summary, I find that the requirement that group members opt in to the proceeding to be inconsistent with terms and policy of Part IVA. It is inappropriate that the proceeding continue under Part IVA while the MBC criterion is part of the description of the representative group. I also find that, in the way in which the MBC criterion subverts the opt out process, it is an abuse of the Court’s processes as established by Part IVA. The second, perhaps even more fundamental, objection to the MBC criterion is that it dictates who should represent group members. I find it an extraordinary proposition that the definition of the representative group should be used to confine a representative group to the clients of one solicitor, however narrowly the group is otherwise defined. In my view there is no support in principle or authority for this proposition and it is repugnant to the policy of the Act.

9.24

P Dawson Nominees Pty Ltd v Multiplex Ltd

(2007) 242 ALR 111; [2007] FCA 1061 (Finkelstein J) Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; 244 ALR 600; [2007] FCAFC 200 (French, Lindgren and Jacobson JJ) Dawson (applicant) commenced a representative proceeding against Multiplex entities (respondents) on the basis that the applicant and the group members it represents suffered loss and damage as a result of the respondents’ alleged failure to comply with disclosure requirements and other certain misleading and deceptive [page 147] conduct. The description of the represented group, inter alia, was restricted to investors who had as at the commencement of the proceeding entered a litigation funding agreement with International Litigation Funding Partners (ILF). At first instance, it was submitted on behalf of the respondents that the ILF criterion was inconsistent with the terms of policy of Federal Court Act Pt IVA. Finkelstein J, however, dismissed that submission and made reference to an important distinction between this case and Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394, namely, that the description of the represented group in this case required the group members to instruct a particular entity as at the commencement of the proceeding rather than ‘at any particular time’ (albeit that this particular issue was not the focus of Stone J’s judgment in Dorajay). Finkelstein J observed (at [58]): The MBC criterion was not without its problems. It contemplated that group membership could change from day to day up to the day of judgment. This may not be permissible. It will be recalled that s 33H requires there to be a description or identification of group members to whom the group proceeding relates. A group member is a member of a group of persons on whose behalf a representative proceeding has been commenced. The assumption seems to be that subject to s 33K (enacted to deal with causes of action accruing after the commencement of the proceeding) a person must be a group member at the time the group proceeding is commenced. If that is the proper construction of the relevant provision, group

membership cannot be dependent upon some future event; nor could unborn children or future beneficiaries of a trust be group members.

9.25 This position was further clarified on appeal to the Full Court of the Federal Court, where Jacobson J observed (at [142]–[143]): Part IVA does not use the expression ‘opt in’. But a group definition that allowed a person to take a positive step of ‘opting in’ after the commencement of the proceeding would be inconsistent with one or more of ss 33C, 33H, 33J and 33K. Senior Counsel for Dawson accepted that a post-commencement right to opt in was not permissible. However, no such question arises in the present case because the third element of the definition [the ILF criterion] restricts the class to persons who have entered into a funding agreement at the commencement of the proceeding. Dorajay 147 FCR 394 is distinguishable because group membership could change after the commencement of the proceedings … [Emphasis added]

9.26

City of Swan v McGraw-Hill Financial Inc (2014) 223 FCR 328 (Rares J)

See discussion in Chapter 4. [page 148]

9.27

Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11 (French CJ, Kiefel, Keane, Nettle and Gordon JJ)

See discussion in Chapter 4.

• SAMPLE GROUP DEFINITIONS • In the Vioxx pharmaceutical class action, Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd [2010] FCA 180, the group members to whom the proceeding relates were described (at [10]) as:

… all persons who: (a) after 30 June 1999 obtained from a medical practitioner in Australia one or more prescriptions of the non-steroidal anti-inflammatory drug rofecoxib sold as tablets under the trade mark or brand ‘Vioxx’ … as pleaded in paragraph 6 herein; and (b) after 30 June 1999 completed one or more prescriptions of Vioxx tablets purchased in Australia as pleaded in paragraph 7 herein; and (c) at any time after completing their first prescription of Vioxx tablets purchased in Australia but before the day 30 weeks after last consuming a Vioxx tablet, suffered and were diagnosed as having suffered one or more of the following conditions: (i) myocardial infarction; (ii) thrombotic stroke; (iii) unstable angina; (iv) transient ischaemic attack; (v) peripheral vascular disease; …

In Auskay International Manufacturing & Trade v Qantas Airways Ltd (2008) 251 ALR 166, a class action against airlines resulting from an air cargo cartel, the applicant commenced the action on behalf of all persons who fit the following description (at [26]): The group members to whom this proceedings relates … are all those persons currently resident in Australia who during the period 1 January 2000 to 11 January 2007 … paid more than AUD$20,000 for the carriage of goods to or from Australia by air and who are not related parties of the Respondents or any of them within the meaning of the Corporations Act.

[page 149] The class action by shareholders in King v GIO Australia Holdings Ltd [2000] FCA 617 identified the representative group in the following way (at [8]): The group members to whom this proceeding relates (‘the group members’) are all persons who owned shares in GIO continuously between 25 August 1998 and 4 January 1999 (‘the relevant period’) and who did not accept the takeover offers for those shares made by AMP Insurance Investment Holdings Pty Ltd (‘AMP’) on 25 August 1998 (and varied on 9 December 1998) by reason of the conduct alleged in this Second Further Amended

Statement of Claim of all or any of the Respondents and who suffered loss as a consequence, but the group members do not include: (a) Grant Samuel or any body corporate related to GIO or Grant Samuel (within the meaning of s 50 of the Corporations Law); (b) any related entity of GIO or Grant Samuel (within the meaning of s 9 of the Corporations Law); (c) any proprietary company of which any of the Directors is a director or shareholder, or the beneficiary of any trust of which any such Director or corporation is the trustee; and (d) AMP Ltd and any related body corporate of AMP Ltd (within the meaning of s 50 of the Corporations Law) or any director thereof.

In Duval-Comrie v Commonwealth (proceeding no VID1367/2013), group members were defined as: Intellectually disabled workers, each of whom, as at 22 October 2013, was or had been employed in an Australian Disability Enterprise (ADE) and each of whose wage had been, or at 22 October 2013 was proposed to be, assessed using the Business Services Wage Assessment Tool (BSWAT).

In Matthews v SPI Electricity Pty Ltd (Supreme Court of Victoria, No. 4788 of 2009 (the Kilmore East bushfire class action), the group was defined as: (a) the person is on the List of Personal Injury Clients filed by the plaintiff’s solicitors (Maurice Blackburn) in the Supreme Court of Victoria on 7 December 2012; or (b) the person suffered personal injury (whether physical or psychiatric injury) as a result of: (i) the bushfire; and/or (ii) the death of or injury to another person as a result of the bushfire, or (c) the person represents the estate of, or are a dependent of any person who died in or as a result of the bushfire; or (d) the person suffered loss of or damage to property as a result of the bushfire; or

[page 150] (e) at the time of the bushfire the person resided in, or had real or personal property in, the ‘bushfire area’ and suffered economic loss as a result of the bushfire which did not result from personal injury or property damage.

The ‘bushfire area’ was defined by reference to a map of the bushfire area attached to the statement of claim, and encompassed five Victorian municipalities: Mitchell Shire, Murrundindi Shire, Nillumbik Shire, the Shire of Yarra Ranges and the City of Whittlesea. In De Jong v Carnival PLC (proceeding no 2015/254964), group members were defined to include persons who: (a) Had booked and paid for the cruise referred to in paragraph 4 hereof; and (b) Suffered loss and damage because of the conduct of the defendant in contravention to chapters 2 and 3 of the Australian Consumer Law.

In the DePuy ASR Hip Replacement class action, group members were broadly defined as: … persons who had surgery performed on them in Australia to implant one or both of the following implants: (i) DePuy ASR Hip Resurfacing System (ASR Resurfacing Implant); and/or (ii) DePuy ASR XL Acetabular System (ASR XL Implant).

However, under the settlement scheme subsequently approved by the court in Stanford v DePuy International Ltd (No 6) [2016] FCA 1452, not all group members were eligible for compensation (at [62]): Group members will only be eligible to claim compensation if they satisfy the following criteria: first, they were implanted with an ASR implant in Australia; second, they have undergone either an actual or a ‘deemed ASR revision’ within 13 years of their primary surgery; third, the ASR revision was not an ‘ineligible revision’; and fourth, the group member has not opted out of the proceeding.

In Wotton v Queensland (No 8) [2017] FCA 639, the group members bound by the common questions and answers were defined as Aboriginal persons and Torres Strait Islanders resident on Palm Island as at 19 November 2004 and still resident on Palm Island as at and including 25 March 2010. The sub-group members were then defined as: (a) were apprehended or arrested by, or in the presence of Special Emergency Response Team or Public Safety Response Team officers in connection with the events on Palm Island on 26 November 2004; (b) were present at the arrests referred to in the preceding sub-paragraph;

[page 151] (c) otherwise witnessed or were present during the Raids (as defined in the Third Further Amended Statement of Claim); and/or (d) had their homes entered into, or their property otherwise interfered with, by officers of the Queensland Police Service during the Raids without their consent.

In the Manus Island class action, Kamasaee v Commonwealth (proceeding no 2014/06770), there were two groups represented by the lead applicant: … all persons who at any time during the period 21 November 2012 until 19 December 2014: (a) were detained by or on behalf of the Commonwealth pursuant to the Migration Act; and (b) as detainees, were taken by officers of, or on behalf of, the Commonwealth from Australia to PNG; and (c) were detained at the detention facility known to the parties as the ‘Manus Island Regional Processing Centre’ (the Centre) on Los Negros Island in Manus Island Province in PNG; and (d) suffered personal injury (including but not limited to psychological or psychiatric injury) as a result of the conduct of the Commonwealth, G4S and/or Transfield, described in this Statement of Claim; (together and severally Negligence Group Members).

And: … all persons who at any time during the period 21 November 2012 until 12 May 2016 were confined at the Centre by or on behalf of: (a) the Commonwealth; (b) Transfield; and/or (c) G4S (together and severally False Imprisonment Group Members).

The Bonsoy class action (proceeding no 2010/05318) was commenced in the Supreme Court of Victoria on behalf of all persons: (a) who, during the period 1 July 2004 and 24 December 2009 (‘the period’), consumed soy

milk sold in Australia under the mark or brand ‘Bonsoy’ (‘Bonsoy’) and, as a result of consuming of Bonsoy, suffered thyroid dysfunction, exacerbation of pre-existing thyroid conditions or iodism; or (b) infants who suffered thyroid dysfunction as a result of maternal consumption of Bonsoy during the period (‘the infants’).

[page 152] The settlement of the Newcrest Mining shareholder class action was approved by the court in Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (No 3) [2017] FCA 330, granting relief to persons who (at [1]): … acquired an interest in ordinary shares in Allco between 21 August 2007 and 27 February 2008 (the relevant period) and suffered loss or damage as a result of the alleged conduct of Allco and KPMG.

[page 153]

CHAPTER 10 Right of Group Member to Opt Out: s 33J • OVERVIEW • The Federal Court of Australia Act 1976 (Cth) (Federal Court Act) s 33J provides a mechanism for group members to opt out of a representative proceeding. The legislative regime permits a lead applicant to commence a claim for, and on behalf of, group members who can be defined by description. As a result, group members will often be part of a representative proceeding without their consent being obtained: s 33E. The opt-out mechanism provides a basis for those individuals to extract themselves from the proceedings so that they are not bound by any judgment (s 33ZB) or settlement. If a group member opts out they are no longer part of the proceedings. The right to opt out is mandatory and must be provided to group members unless the court grants relief pursuant to s 33ZF. The court will typically order the publication of opt-out notices in a manner which is designed to ensure group members are notified of the proceedings. This will include publication in newspapers, other media forums including social media, and (where available) direct mail or email.

• LEGISLATION • Section 33J, Federal Court of Australia Act 1976 (Cth)

Right of group member to opt out (1) The Court must fix a date before which a group member may opt out of a representative proceeding. (2) A group member may opt out of the representative proceeding by written notice given under the Rules of Court before the date so fixed. (3) The Court, on the application of a group member, the representative party or the respondent in the proceeding, may fix another date so as to extend the period during which a group member may opt out of the representative proceeding. (4) Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding. [page 154] Section 33J, Supreme Court Act 1986 (Vic) Right of group member to opt out (1) The Court must fix a date before which a group member may opt out of a group proceeding. (2) A group member may opt out of the group proceeding by notice in writing before the date so fixed. (3) The Court, on the application of a group member, the plaintiff or the defendant, may extend the period within which a group member may opt out of the group proceeding. (4) Except with the leave of the Court, the trial of a group proceeding must not commence earlier than the date before which a group member may opt out of the proceeding. (5) Unless the Court otherwise orders, a person who has opted out of a group proceeding must be taken never to have been a group member. (6) The Court, on the application of a person who has opted out of a

group proceeding, may reinstate that person as a group member on such terms as the Court thinks fit.

Section 162, Civil Procedure Act 2005 (NSW) Right of group member to opt out (1) The Court must fix a date before which a group member may opt out of a representative proceeding in the Court. (2) A group member may opt out of the representative proceeding by written notice given under the local rules before the date so fixed. (3) The Court may, on the application of a group member, the representative party or the respondent in the proceeding, fix another date so as to extend the period during which a group member may opt out of the representative proceeding. (4) Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding.

Section 103G, Civil Proceedings Act 2011 (Qld) Right of group member to opt out (1) The court must fix a date before which a group member may opt out of a representative proceeding. [page 155] (2) A group member may opt out of the representative proceeding by giving written notice before the date fixed under subsection (1). (3) On the application of a group member, the representative party or the defendant, the court may fix a later date to extend the period

during which a group member may opt out of the representative proceeding under subsection (2). (4) Except by leave of the court, the hearing of a representative proceeding must not start earlier than the date before which a group member may opt out of the proceeding.

• COMMENTARY • Purpose of Provision 10.1 Federal Court Act s 33J gives effect to the policy decision made by parliament to adopt an opt-out regime for representative proceedings by providing group members with a right to opt out, rather than requiring them to take a positive step to opt in to a representative proceeding: see Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394 at [106], [110] per Stone J. Section 33J provides the mechanism by which the court can fix a date for group members to opt out of a proceeding so that they are not bound by any judgment made by the court: s 33ZB. In accordance with the Australian Law Reform Commission (ALRC) recommendation, ‘the mechanism for opting out is designed to be simple and involve as little costs as possible’: ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [181]. 10.2 While the opt-out mechanism is important for groups that are defined by description and where consent of group members has not been obtained, its utility is less clear in representative proceedings where the group members are identified (or identifiable). For example, some representative proceedings, particularly those commenced with the support of a litigation funder, will be brought on behalf of a number of individuals identified in a schedule to the claim. As those group members have made an active decision to take part in the proceedings, and their consent has been obtained, the role of the opt-out mechanism is not clear. The courts have generally required formal notice to be given to group members in a closed class as a matter of procedure; however, it is likely that with an increase in

frequency of ‘closed classes’ more attention will be given to the utility of issuing an opt-out notice in such circumstances. In Vernon v Village Life Ltd [2009] FCA 516, although noting the importance of the opt-out requirement to the representative proceeding regime of Pt IVA, Jacobson J exercised the court’s broad power pursuant to s 33ZF and dispensed with the requirements of s 33J. See s 33H (Chapter 9) for further discussion of ‘closed classes’. [page 156] The issue of notice to group members in a closed class arose in a different context in Farey v National Australia Bank Ltd [2014] FCA 1242 (18 November 2014), where there was an application to ‘open’ the closed class proceedings for a short period of time and then ‘close’ it again, so as to facilitate settlement discussions. Jacobson J observed (at [18]): It may be unlikely that persons who have already taken the trouble to register would wish to opt out. Nonetheless, they are required to be given that opportunity and the notice does so.

Practice Notice Guidance 10.3 The Federal Court Class Actions Practice Note (GPN-CA) provides the following guidance about the opt-out notice: 11.

OPT OUT NOTICE

11.1

Class members may opt out of a class action by giving a written opt out notice to the Court by a date which must be fixed for that purpose by the Court (see s 33J of the Federal Court Act). An opt out notice must comply with Form 21 (see r 9.34 of the Federal Court Rules).

11.2

The applicant’s lawyers should ensure that the opt out notice: (a) uses plain language and gives a balanced, succinct description of the claims and defences in the proceeding; (b) clearly describes the consequences of remaining a class member or alternatively opting out of the proceeding, including a succinct explanation of how a judgment or settlement in the proceeding will or may preclude class members from relying on the same or related claims or defences in other proceedings;

(c) alerts class members to the fact and consequences of any costs agreement or litigation funding agreement made or intended for the proceeding; (d) is sent, published or broadcast via media which are best calculated to achieve the effective dissemination of the notices among class members in the most costeffective way. A sample form of such an opt out notice is available on the Court’s website. It may be appropriate in some cases to use a shorter form of notice. 11.3

Where the class members are, or are likely to be, identifiable from a respondent’s records (for example, shareholders of a respondent corporation or unitholders in a managed investment scheme) then the parties should, subject to any clear statutory or legal obligations requiring otherwise, cooperate with a view to using the respondent’s records as the basis for a direct mail or email distribution of notices, whether by the applicant, by the respondent or by a third party (for example, a commercial mail house).

[page 157] 11.4

An objection to the use of the respondent’s records to assist the opt-out process in this way must be advised by the respondent to the applicant’s lawyer at the earliest practicable opportunity. The parties should engage in a genuine effort to resolve the issue in a practical way before agitating the issue before the Court.

11.5

The Court will approve an appropriate manner of distribution of the notice to be given to class members informing them of the commencement of the class action, and of their right to opt out of the proceeding by the date that the Court has fixed (see ss 33X(1)(a), 33X(2) and 33Y of the Federal Court Act).

11.6

The timing of the opt-out notice to class members is a matter to be dealt with at a case management hearing.

Guidance in other jurisdictions is provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [9]; the Supreme Court of New South Wales Practice Note SC Gen 17 — Supreme Court Representative Proceedings at [8.2]; and the Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings at [9.2].

Timing of Opt-out Notice — Date to be Fixed by the Court

10.4 Section 33J provides the court with discretion to fix a date for group members to opt out of the proceeding: see s 33J(2); Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4) [2010] FCA 749 at [18]–[21] per Flick J. The only constraint imposed by the provisions is that, absent a specific order made by the court providing otherwise, the date fixed to opt out of the proceedings must be before the commencement of the hearing of the proceeding: see s 33J(4). The Federal Court Class Actions Practice Note (GPN-CA) states that the timing and form of an opt-out notice is a matter to be discussed at subsequent case management hearings: see [8.2]. This is to be contrasted with the former Practice Note CM17 which stated that the timing and form of the opt-out notice was something that should be discussed at the initial case management conference. This change reflects the reality that the issues arising in class action litigation are becoming more complex, which means that courts are generally publishing an opt-out notice at a later date once interlocutory issues have been considered. Similar guidance is provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [5.9]; the Supreme Court of New South Wales Practice Note SC Gen 17 — Supreme Court Representative Proceedings at [8.1]; and the Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings at [9]. However, the fact that the form of pleading may change following the optout notice being published will not always operate as a reason to delay the publication of the opt-out notice: see Oztech Pty Ltd v Public Trustee of Queensland [2015] FCA 1010. [page 158] The period set by the court for opting out of a representative proceeding has varied; however, the court will endeavour to ensure that group members are provided with sufficient time to make an informed decision about their rights: see Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4) at [22] per Flick J; Vernon v Village Life Ltd at [59] per Jacobson J.

Subject to the exception set out in s 33J(3) (see below), if a group member does not opt out by the date fixed by the court, he or she will remain a group member and will be bound by the outcome of the proceedings: see s 33ZB (Chapter 28).

Form of the Notice 10.5 Section 33J operates in conjunction with other sections of Federal Court Act Pt IVA that govern the content of the notice issued to group members: see s 33X (Chapter 24) and s 33Y (Chapter 25). In the Federal Court, the form of the opt-out notice must comply with Form 21: Federal Court Rules r 9.34; Class Actions Practice Note (GPNCA). In Victoria, Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 18A.04 provides that a notice in writing under s 33J(2) shall be in the form of Form 18AB. There is no prescribed form of opt-out notice under the New South Wales or Queensland representative proceedings regime; however, Uniform Civil Procedure Rules r 58.2(1) provides that a group member who elects to opt out must file and serve the representative party with a notice in the ‘approved form’. A sample of opt-out notices which have been ordered in recent representative proceedings is included below.

Sample Opt-out Notice 10.6 See Chapter 39 — Sample Opt-Out Notice annexed to Federal Court Class Actions Practice Note (GPN-CA).

Class Closure and Opt-out Notices 10.7 The issue of class closure is discussed in Chapter 32. Where the court exercises its discretion to make class closure orders, it can occur at the time of the publication of the opt-out notice, which means that the opt-out notice will also include details about the class closure orders and how a group

member can register their interest in the claim: see Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296; Inabu Pty Ltd v Leighton Holdings Ltd [2014] FCA 622 (6 June 2014). In other cases, the class closure orders will occur independently of the opt-out notice, and a further notice is sent to group members: see Muswellbrook Shire Council v The Royal Bank of Scotland NV [2017] FCA 414 (21 April 2017). [page 159]

Litigation Funding, Common Fund, and Opt-out Notices 10.8 Where a case is funded by a litigation funder, the opt-out notice should alert group members to the fact and the consequences of any costs agreement including any litigation funding agreement: see Federal Court Class Actions Practice Note (GPN-CA) at [11.2(c)]. Where there is, or may be, an application for a common fund (see discussion in Chapter 32) the Full Court of the Federal Court of Australia has said, in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; 338 ALR 188 (at [13]): … we contemplate that before class members are required to choose whether or not to opt out, they will be informed of the proposed orders and the fact that they will have deducted from any settlement or judgment a reasonable funding commission at a Court-approved rate. If class members are concerned about an obligation to pay a reasonable Court-approved funding commission, they can opt out of the proceeding and bring their own case (either individually or collectively) with or without other funding arrangements.

Extension of Time to Opt Out of a Proceeding 10.9 Section 33J(3) recognises that there are certain circumstances which will require the court to extend the opt-out period ‘during which’ a group member may opt out of a proceeding. An application would need to be made to the court under Federal Court Act s 33J(3) (Civil Procedure Act 2005 (NSW) s 162(3) or Supreme Court Act 1986 (Vic) s 33J(3)) to extend the period of time during which a group member may opt out of the proceeding. An example of such a circumstance is where s 33J(3) is used to effect ‘class

closure’ in relation to settlements. See the discussion in Chapter 22. Other examples of the need for extension of time to opt out of a proceeding are where sub-groups are formed after the commencement of the proceedings pursuant to s 33Q or where misleading statements have been made to group members that need to be corrected: see Jarra Creek Central Packaging Shed Pty Ltd v Amcor Ltd [2008] FCA 575.

Reinstatement into a Representative Proceeding 10.10 Unlike the Supreme Court Act 1986 (Vic), the Federal Court Act, the Civil Procedure Act 2005 (NSW) and the Civil Proceedings Act 2011 (Qld) do not contain express provisions which empower the court to reinstate a group member who has opted out of the proceedings. Supreme Court Act 1986 (Vic) s 33J(6) provides: The Court, on the application of a person who has opted out of a group proceeding, may reinstate that person as a group member on such terms as the Court thinks fit.

[page 160] The jurisdictions of the Federal Court, the Supreme Court of New South Wales and the Supreme Court of Queensland would need to rely upon a general source of power to reinstate a group member after he or she has opted out of a proceeding: see Federal Court Act s 33ZF; Civil Procedure Act 2005 (NSW) s 183; Civil Proceedings Act (Qld) s 103ZA. 10.11 In exercising its power, the court will consider a number of factors to determine whether it is appropriate to reinstate a group member. In Paxtours International Travel Pty Ltd v Singapore Airlines Ltd [2012] FCA 426, following the approval of a settlement between the applicant and the respondent, Webjet Marketing Pty Ltd sought to be reinstated as a group member to the proceeding. In determining whether to reinstate Webjet, Robertson J considered that there are a number of factors relevant to the exercise of the court’s discretion and stated that one of the major considerations was the relative risk associated with the opt-out process and

the prejudicial effects of reinstating Webjet as a group member: at [43], [65]. The application to reinstate Webjet as a group member was dismissed. Examples of circumstances where the court may exercise its discretion to reinstate a group member include: where a group member can demonstrate that he or she filed the opt-out notice by mistake; where there is no unreasonable delay in withdrawing the opt-out notice; where there is no material prejudice to the parties to overcome any injustice arising from the withdrawal of an opt-out notice; or where there is a possibility the group member acted on incompetent information in making a decision to opt out: see King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 364; Darcy v Medtel Pty Ltd [2002] FCA 925.

Statute of Limitations 10.12 Federal Court Act Pt IVA s 33ZE provides for the suspension of the running of ‘any limitation period’ that applies to the claims of group members ‘upon the commencement of a representative proceeding’: see the discussion in Chapter 31. The Federal Court Act provides that the suspension applies until a group member opts out of the proceeding pursuant to s 33J or there is a final determination made in relation to the representative’s claim (that does not finally dispose of the group member’s claim). The position is the same in Victoria, New South Wales and Queensland. [page 161]

• CASE LAW • 10.13

Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; 67 IPR 124; [2005] FCA 1483 (Stone J)

Dorajay Pty Ltd commenced representative proceedings against Aristocrat

Leisure Ltd for misleading and deceptive statements in relation to its profitability in 2002 and 2003 in contravention of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) and the Trade Practices Act 1974 (Cth). The representative group was defined as persons who had retained Dorajay’s solicitors, Maurice Blackburn Cashman, and who acquired shares in Aristocrat during a specified period of time. When members entered into a retainer agreement with Maurice Blackburn Cashman they were also required to enter into a funding agreement with the litigation funder, Insolvency Litigation Fund Pty Ltd. The application considered by the court was an interlocutory application brought by Aristrocrat to declass the proceedings pursuant to s 33N. In considering the background and legislative scheme of Federal Court Act Pt IVA, Stone J stated (at [110]) that it is: … plain from the clear terms of ss 33E and 33J of the Act, in light of the Second Reading Speech, the Explanatory Memorandum and the ALRC Report that Parliament made a deliberate policy choice in adopting the opt out procedure. However, the legislature also accepted the recommendation of the ALRC in so far as they advocated that the right to opt out must be limited, albeit in a relatively minor way: see s 33J of the Act.

10.14

Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4) [2010] FCA 749 (Flick J)

Pharm-a-Care Laboratories brought an action under Federal Court Act Pt IVA on behalf of itself and 161 other sponsors, suppliers and distributors of products manufactured by Pan Pharmaceuticals Ltd against the Commonwealth and five current and former officers of the Therapeutic Goods Administration arising from regulatory action taken against Pan Pharmaceuticals in 2003. Orders were sought approving the form and content of a notice to be given to group members and fixing a date before which a group member may opt out of the proceedings. In consideration of the date ‘before which a group member may opt out of a representative proceeding’, Flick J highlighted the importance of ensuring sufficient time is given to a group member to make an informed decision.

Adequate time must also be dictated by the facts and circumstances of each individual proceeding. Flick J referenced the express constraint imposed by s 33J(4), namely [page 162] that ‘the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding’, except with leave of the court. Subject to the potential application of that constraint, when fixing a date, adequate time must be allowed between the receiving of the notice and the date by which a recipient has to make a decision. In fixing a specific date by which a group member may opt out of the proceedings, Flick J noted (at 22): Where a little more time will not impact upon the preparation of a case for hearing, or potentially impede any forthcoming mediation, perhaps a little more time should be permitted.

10.15

Vernon v Village Life Ltd [2009] FCA 516 (Jacobson J)

Richard Vernon and Peter Hanne & Associates Pty Ltd brought claims for damages on behalf of themselves and group members against Village Life Ltd and a number of former or current officers of the company. The allegation was that Village Life Ltd and the named individual respondents breached their personal obligations of continuous disclosure pursuant to Corporations Act 2001 (Cth) s 674, by providing misleading forecasts for the profit of the company. The parties sought orders from the court approving a settlement of the representative proceedings and dispensing with the requirements for opt-out notices and notices of settlement of the proceedings. Drawing on observations made in King v GIO Australia Holdings Ltd [2001] FCA 270, Jacobson J reiterated the importance of the s 33J requirements in ensuring

that group members have the opportunity to make an informed decision about their rights. However, his Honour also noted that, by virtue of s 33ZF, there is a discretionary power of the court to dispense with the requirements of the opt-out requirements stated in ss 33J and 33X(1)(a). Exercising this power, Jacobson J ordered that the requirements of ss 33J and 33X(1)(a) of the Act be dispensed with. This order was made on the basis that because group members had been notified on at least two prior occasions of their right to opt out, and they had been invited on both these occasions to indicate whether, if given the opportunity to do so, they would wish to exercise their entitlement to opt out, further notice would be a futile exercise. His Honour stated (at [71]): It seems to me to be clear enough that all group members, whilst they would not have read the pleadings, would at very least understand the general nature of the matters alleged against the respondents, and the fact that the respondents deny contraventions of the law would seem to be fairly obvious.

While the form and content of the correspondence to the group members was not sent with prior approval of the court, his Honour submitted that sufficient [page 163] information had been supplied to group members and as such the order was made to dispense with the opt-out notice requirements.

10.16

Oztech Pty Ltd v Public Trustee of Queensland [2015] FCA 1010 (Yates J)

A representative proceeding was commenced in the Federal Court of Australia by Oztech Pty Ltd against the Public Trustee of Queensland. The action arose out of the Public Trustee’s role as trustee of a trust in connection with notes (OIN Notes) issued by Octaviar Investment Notes Limited (OIN). The claim alleges that the Public Trustee acted too slowly in January and February 2008 to protect the interests of noteholders by failing

to apply to wind up OIN and Octaviar Limited (OL), and to take other steps, by 29 February 2008. In this instance, the relevant issue was whether it was the appropriate time to send group members an opt-out notice. Pleadings had been closed for some time, and yet no notice had been given to group members pursuant to Federal Court Act s 33X(1)(a). The applicant’s position was that a notice under s 33X(1) should have been sent, but that there was no pressing need to give group members notice of their right to opt out under 33J because the applicant was still considering the respondent’s discovery (which was large) and that pleadings might be amended following discovery. At [35] Yates J was: … not persuaded that there should be any delay in giving an opt out notice to group members simply because the applicant is still reviewing the documents produced on discovery by the respondent. The fact is, pleadings closed some months ago as a result of a deliberate decision of the applicant, and there is no formulated proposed amendment currently before the Court. Indeed, whether there will be any application to amend is, as I have stated, a matter of speculation only. The same applies to the possibility that, at some time in the future, the applicant might seek leave of the Court to file a reply. The applicant is correct to point out that the amendment of pleadings is not an uncommon course. But such applications are an incident of all proceedings, not just those under Part IVA. I do not think that the possibilities to which the applicant has referred provide a cogent reason for departing from the usual position of sending out opt out notices to group members shortly after the close of pleadings.

10.17

Farey v National Australia Bank Ltd [2014] FCA 1242 (Jacobson J)

This was a representative proceeding commenced by Steven Harold Francis Farey, Susan Ann Farey and Farey Enterprises Pty Ltd against National Australia Bank Ltd (NAB). The action arose out of a claim that NAB had unlawfully charged to its [page 164]

customers certain fees on personal and business transaction accounts and personal credit card accounts. The applicants were represented by Maurice Blackburn, and the action was funded by Bentham IMF Ltd (IMF). Each of the proceedings was commenced as a ‘closed class’ proceeding. The purpose of the application in this instance was to open the class for a short period of time and then to close it, so as to facilitate settlement negotiations. The orders sought included the fixing of a date for group members to opt out of the proceeding in accordance with s 33J of the Act and an order that any group member who wishes to participate in any settlement, but had not previously registered, must register by a specific date. Group members who did not opt out but did not register, would be bound by any resolution of the representative proceeding but would not be entitled to participate in the distribution of any future amount agreed in settlement. Jacobson J made those orders, having regard to policy considerations of the opt-out model as follows (at [11]–[18]): I am satisfied that I have the power to make the class closure orders under s 33ZF of the Act. The authorities establish that that section is to be broadly construed: see McMullin v ICI Australia Operations Pty Limited (1998) 84 FCR 1 at 4. See also Courtney v Medtel Pty Limited (2002) 122 FCR 168 at [48]–[49]. … The authors of Class Actions in Australia (2nd ed) point at [14.410] to the need for respondents in a case such as this to identify all group members so that any settlement payment is ‘capped’ by reference to a precise number of potential claimants and to ensure finality to the proceeding including limiting exposure to future claims. It is that consideration which, in my opinion, informs the exercise of the power in the present case. It is true that a well-known commentator on representative actions, Professor Vince Morabito, has criticised this approach as failing to pay sufficient regard to the opt out model adopted by Pt IVA of the Act. However, in my opinion, the approach which is proposed by the parties this morning is not inconsistent with Pt IVA and is well supported by the authorities to which I referred in Inabu and also by the large number of authorities described by the authors of Class Actions in Australia at [14.430] and following. As I have said, the issue is one for the discretion of the Court. Bromberg J in Winterford v Pfizer Australia Pty Limited [2012] FCA 1199 declined to make a class closure order. His Honour considered that there should be some compelling reason for the Court to do so. In Winterford the application was made at a very early point in the proceeding and the considerations which arise this morning were not in issue. I therefore consider that the

decision in that case is distinguishable from the present case. What seems to me to be critical is that all of the current and potential group members be properly informed of their rights and the potential impact on those rights by means of notices approved by the Court.

[page 165] … It may be unlikely that persons who have already taken the trouble to register would wish to opt out. Nonetheless, they are required to be given that opportunity and the notice does so.

10.18

Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98 (Jagot, Yates and Murphy JJ) (Appeal from Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296)

Melbourne City Investments Pty Ltd (MCI) sought leave to appeal against interlocutory orders made by Foster J in Jones v Treasury Wine Estates Ltd [2017] FCA 296, being a shareholder representative proceeding in which MCI was a group member. MCI was also the lead applicant in a competing representative proceeding, making similar allegations against Treasury Wine Estates. That representative proceeding had been permanently stayed for abuse of process. Before the primary judge, Treasury Wine Estates sought orders to close the class in anticipation of settlement. It sought that the class be closed for ‘all purposes’, such that even if a settlement was not reached, group members who neither opted out nor registered would also be precluded from sharing in the proceeds of any future judgment. Foster J declined to make that order, but did close the class for the purpose of settlement and approved the form and content of an opt-out and claim registration notice to be sent to group members. MCI sought leave to appeal in relation to those orders, arguing (amongst other things) that the approved notice was misleading because it failed to adequately inform group members that if they did nothing, that is, they

neither opted out nor registered to participate in the settlement, they may still be entitled to share in any future judgment. It characterised the notice as a ‘coercive threat’, incorrectly advising group members that they must either register or miss out. The Full Court refused to grant leave to MCI. In considering the adequacy of the notice, the Full Court did express the view that the opt-out notice had not clearly set out the effect of the class closure order (at [101]–[102]): In our view, the few sentences in the opt out notice which touch on the entitlement of class members, who neither opt out nor register, to share in any subsequent judgment are unclear … ordinary and reasonable class members may have understood the opt out notice as conveying that, if they neither opted out nor registered, they would be precluded from sharing in any subsequent judgment (not just precluded in relation to settlement) when, in fact, the orders only precluded them from participating in a settlement, not judgment.

However, the Full Court determined that that lack of clarity did not give rise to any substantial injustice such as to warrant the grant of leave to appeal. The [page 166] approved notice had achieved its purpose of informing group members of two main matters, being their right to opt of the representative proceeding if they wished to do so; and the need for them to register if they did want to share in the potential settlement. The Full Court reasoned that if any group member was misled, the only difference between the potentially misleading impression and the true position was to the benefit of group members, that is, their supposedly unknown right to share in any judgment. In respect of class closure orders generally, the Full Court did express concern that an order requiring group members to register their claim prior to judgment ‘undercuts to some extent the opt-out rationale underpinning the Part IVA regime’: at [72]. It emphasised that there must be a good reason to exercise the discretion to make class closure orders, but accepted that such orders have often been necessary to facilitate settlement. The Full Court indicated that class closure orders that operate to lock group members out of the proceeds of a future judgment should be made cautiously, as there is no

good reason to disentitle a group member for not responding to an ‘arbitrary deadline’: at [78].

[page 167]

CHAPTER 11 Altering the Group Description: s 33K • OVERVIEW • Section 33K provides the court with power to alter the group description upon an application by the representative party. The heading of s 33K suggests that it is only concerned with an alteration to the description of the group to include persons whose causes of action have accrued after commencement of the proceeding. However, the authorities have made it clear that the section is not so limited: Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 at [25]; Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 3) (2010) 267 ALR 494 at [54]. The exercise of the discretion granted to the court to amend the group definition is broad. In exercising the discretion the court will weigh what is just and efficient in the circumstances.

• LEGISLATION • Section 33K, Federal Court of Australia Act 1976 (Cth) Causes of action accruing after commencement of representative proceeding (1) The Court may at any stage of a representative proceeding, on application made by the representative party, give leave to amend the application commencing the representative proceeding so as to alter the description of the group. (2) The description of the group may be altered so as to include a person:

whose cause of action accrued after the commencement of the (a) representative proceeding but before such date as the Court fixes when giving leave; and (b) who would have been included in the group, or, with the consent of the person would have been included in the group, if the cause of action had accrued before the commencement of the proceeding. [page 168] (3) The date mentioned in paragraph (2)(a) may be the date on which leave is given or another date before or after that date. (4) Where the court gives leave under subsection (1), it may also make any other orders it thinks just, including an order relating to the giving of notice to persons who, as a result of the amendment, will be included in the group and the date before which such persons may opt out of the proceeding.

Section 33K, Supreme Court Act 1986 (Vic) Causes of action accruing after commencement (1) The Court may, at any stage of a group proceeding on application made by the plaintiff, give leave to amend the writ commencing the group proceeding so as to alter the description of the group. (2) The description of the group may be altered so as to include a person — (a) whose cause of action accrued after the commencement of the group proceeding but before such date as the Court fixes when giving leave; and (b) who would have been included in the group or, with the consent of the person would have been included in the group, if the cause of action had accrued before the commencement of the

proceeding. (3) The date mentioned in subsection (2)(a) may be the date on which leave is given or another date before or after that date. (4) If the Court gives leave under subsection (1), it may also make any other orders it thinks just, including an order relating to the giving of notice to persons who, as a result of the amendment, will be included in the group and the date before which such persons may opt out of the proceeding.

Section 163, Civil Procedure Act 2005 (NSW) Causes of action accruing after commencement of representative proceedings (1) The Court may at any stage of representative proceedings, on application by the representative party, give leave to amend the originating process commencing the representative proceedings so as to alter the description of the group. (2) The description of the group may be altered so as to include a person: (a) whose cause of action accrued after the commencement of the representative proceedings but before such date as the Court fixes when giving leave, and [page 169] (b) who would have been included in the group, or, with the consent of the person would have been included in the group, if the cause of action had accrued before the commencement of the proceedings. (3) The date fixed under subsection (2)(a) may be the date on which leave is given or another date before or after that date. (4) If the Court gives leave under subsection (1), it may also make any other orders it thinks just, including an order relating to the giving of

notice to persons who, as a result of the amendment, will be included in the group and the date before which such persons may opt out of the proceedings.

Section 103H, Civil Proceedings Act 2011 (Qld) Causes of action accruing after representative proceeding started (1) At any stage of a representative proceeding, on the application of the representative party, the court may give leave to amend the originating process for the proceeding to change the description of the group members. (2) The description of the group members may be changed to include a person— (a) whose cause of action accrued after the start of the representative proceeding but before the date fixed by the court when giving leave; and (b) who would have been a group member or, with the consent of the person would have been a group member, if the cause of action had accrued before the proceeding was started. (3) The date mentioned in subsection (2)(a) may be the date on which leave is given or another date before or after that date. (4) If the court gives leave under subsection (1), the court may also make any other order it considers just, including an order relating to— (a) the giving of notice to persons who, as a result of the amendment, will be included in the description of group members for the representative proceeding; and (b) the date before which the persons may opt out of the representative proceeding.

• COMMENTARY •

Statutory Construction of s 33K 11.1 The heading of s 33K suggests that it is only concerned with an alteration to the description of the group to include persons whose causes of action have accrued after commencement of the proceeding. The ALRC Report No 46 [page 170] ‘Grouped Proceedings in the Federal Court’ (1988) shows that the Commission intended s 33K to apply where a class action concerned a latent injury such as that caused by asbestos where new members might become symptomatic after the commencement of the proceedings. However, the authorities have made it clear that the provision is not so limited. In Bray v F Hoffman-La Roche Ltd [2003] FCA 1505, Merkel J concluded that ‘it is clear that s 33K(1) empowers the court to grant leave in respect of any amendment to the description of the group once a proceeding has been commenced’: at [25]. See also Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 3) at [54]. 11.2 Subsection (1) of 33K is not to be read down by reference to subs (2), (3) or (4). Rather, the ‘specific provisions in sections 33K(2) and (3), to a lesser extent, s 33K(4), are concerned with the particular category of alteration that involves persons whose causes of action accrued after the commencement of the representative proceeding’: Bray at [26]. See also City of Swan v McGraw-Hill Financial Inc (2014) 223 FCR 328; [2014] FCA 931 at [11]–[13]. It should also be noted that s 33K only refers to ‘leave to amend the application commencing the representative proceeding’ (emphasis added). However, s 33H operates in a way that permits a group definition to be included in ‘an application commencing a representative proceedings, or a document filed in support of such an application’ (such as a statement of claim). Where a group definition is included in the statement of claim, the power to amend the group definition is derived from the power to amend

pleadings contained in Federal Court Rules (2011) r 16.53: see Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [15]; Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd [2011] FCA 106. Rule 16.53 provides: 16.53 Application for leave to amend Unless rule 16.51 applies, a party must apply for the leave of the Court to amend a pleading.

However, the general power to amend a pleading operates in parallel to r 8.21, which deals with the amendment power relating to originating applications, which provides: 8.21 Amendment generally (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: … (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises: (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or

[page 171] (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding. … (2) An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started. … [Emphasis added]

Accordingly, in order to enliven the power in Federal Court Rule 16.53 to amend a group definition, an applicant will need to bring themselves within

Federal Court Rule 8.21(g): Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [29].

Date From Which Amendment Takes Effect 11.3 Both s 33K and r 16.53 are silent about when an amendment made under them is to take effect. In Gibson v Malaysian Airline System Berhad (No 2), Perram J observed (at [18]–[19]): It has long been accepted, however, that the usual position is that an amendment to a pleading or originating process takes effect from the commencement of the proceeding: Baldry at 419. On the other hand, that principle does not apply where the effect of an amendment is to add a party: Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230 at [46]– [47] per Brereton J; Ketteman v Hansel Properties Ltd [1987] AC 189 at 200 per Lord Keith of Kinkel. Indeed, this latter principle is express in FCR 9.05(3) (although it refers to the date of the joinder order rather than the original filing date). Because the amendment of a class definition in a pleading does not involve the joinder of a party, it seems that it would be the former principle which would be applied rather than the latter. If the former principle were applied, so that the amendments took effect from the commencement of the proceeding (here 1 July 2016), this would appear to make relevant the so-called rule in Weldon v Neal (1887) 19 QBD 394. If the former principle were applied, so that the amendments took effect from the commencement of the proceeding (here 1 July 2016), this would appear to make relevant the so-called rule in Weldon v Neal (1887) 19 QBD 394. In that case, the plaintiff had sued in slander but after the expiry of the relevant limitation period had sought to amend her claim so as to add other claims including assault. The Court of Appeal held that the appeal should not be permitted. Lord Esher MR said at 395: We must act on the settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments. If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment,

[page 172] would be barred by the Statute of Limitations, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be, in my opinion, improper and unjust. Under very peculiar circumstances the

Court might perhaps have power to allow such an amendment, but certainly as a general rule it will not do so. This case comes within that rule of practice, and there are no peculiar circumstances of any sort to constitute it an exception to such rule. For these reasons I think the order of the Divisional Court was right and should be affirmed. [Emphasis added]

Perram J noted that the rule in Weldon v Neal has been widely ameliorated by statutory and rule changes. In the Federal Court, the effect of the former rules governing pleading amendments was to permit an amendment which was statute barred if it arose out of the same or substantially the same facts, to make an amendment date from the commencement of the proceedings and to confer an unfettered discretion on the court to choose some other effective date if it thought it expedient to do so: at [27]. While the old rules were replaced in 2011, the power to amend a pleading (and the time that the amendment takes effect) operates in the same way as the former rules: at [28]. This means that where an amendment is permitted, the power is discretionary and is accompanied by a power to order that the amendment in question takes effect from some day other than the filing of the original proceedings: Gibson v Malaysian Airline System Berhad (No 2) at [32]. Where the amendment to the group definition involves the addition of new group members, the general rule that an amendment which results in the addition of a new party takes effect from the date of the amendment is likely to apply, even though group members are not strictly a ‘party’ to the proceedings: see Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd; Gibson v Malaysian Airline System Berhad (No 2) at [33].

Matters for Consideration in Exercise of Discretion 11.4 Although s 33K is silent on the factors to be considered by a court in determining whether to exercise its discretion and amend the group definition, the courts have generally focused on what is just and convenient in the circumstances, and will include a consideration of group member interests.

11.5 In Caason Investments Pty v Cao [2014] FCA 1410, Farrell J observed (at [29]): Despite the heading of s 33K, the court has power to grant leave to amend the definition of the group at any time during the proceedings and s 33K(1) should not be read down by reference to the subsequent subparagraphs: Bray

[page 173] v F Hoffman-La Roche Ltd [2003] FCA 1505 at [25]–[27]. The court will be alert to whether any proposed amendment will or may operate to the detriment of group members: see R v GIO Australia Holdings Ltd [2001] FCA 1487 at [5]–[6].

11.6 In Blairgowrie Trading Ltd v Allco Finance Group Ltd (ACN 077 721 129) (recs & mgrs apptd) (in liq) (2015) 325 ALR 539; [2015] FCA 811, the applicants were unsuccessful in their application for an order that all group members be bound by the terms of the litigation funding agreement, whether or not they had signed up to the funding arrangements. In support of the orders, one argument advanced by the applicants was that if the order was not made it would not be commercially viable for the funder to fund the proceeding and they would then apply to the court to amend the group member definition to close the class and include only those persons who had entered into a funding agreement. The court was unpersuaded by the argument, and noted (at [176], [177]) that: … the applicants cannot in any event close the class without the leave of the court under s 33K(1). If, as the applicants appear to submit, the closing of the class would effectively shut group members out of the proceeding to their potential detriment, they may have difficulty in securing leave. In Bray v F Hoffman-La Roche Ltd [2003] FCA 1505, Merkel J made the following observations (at [15]) in the context of an application to narrow the definition of group members: [15] However, special problems arise when an amendment is sought to be made on behalf of an applicant in a representative proceeding under Pt IVA of the Act which will adversely affect the interests of some group members. In the present case the applicant has been placed in a situation of potential conflict between her interest in procuring the amendment and her duty to the group members whose interests may be adversely affected by it. A similar problem arises for the legal representatives of the applicant who have an obligation to

conduct the representative proceeding on behalf of the applicant in a way that is consistent with the interests of group members, irrespective of whether those persons are clients of the solicitors: see King v AG Australia Holdings Ltd (2002) 121 FCR 480; 191 ALR 697; [2002] FCA 872 at [27] per Moore J. If it comes to it, the applicants and their lawyers will no doubt give careful consideration to their duties and obligations, and any potential conflict of interest, before deciding to apply for any narrowing of the group member definition. In any event, any such application will be considered by the court on its merits if and when it is made.

In Jakes v Hospital Corporation of Australia (FCA, Wilcox J, 12 June 1998, unreported), Wilcox J focused on whether it was convenient to make the amendment and whether it may cause prejudice. To address these factors his Honour considered if any ‘practical difficulties’ might arise from the amendment, such as whether there [page 174] had been a trial on liability, a determination of any issues in the litigation, or whether it may be necessary to give notice to people who might be within the new category of group members sought to be added so they could be given the opportunity to opt out of the proceedings. In terms of prejudice, Wilcox J focused on prejudice to the respondent as new group members were being added. His Honour observed (at [19]): If I thought the joinder of the new group of persons would take the case off in a different direction, I would refuse to allow the joinder, particularly given the time that has elapsed. If there had already been a judicial determination in respect of issues relevant to the new group of persons, I would definitely refuse the application; it would not be right to allow a new group of people to come along after there had been a judicial determination and have the benefit of findings that had already been made.

11.7 In Rod Investments (Vic) Pty Ltd v Clark (No 3) [2007] VSC 306 (Rod Investments), Hansen J, dealing with an amendment that would reduce the size of the group by excluding certain group members, observed in relation to ss 33K and 33KA of the Victorian legislation (at [10], [15]): It is axiomatic, I think, in the determination of these submissions, and indeed of all that was submitted, to consider what is the just and convenient way of the proceeding advancing

through to judgment. The considerations which the plaintiff on the one hand and the court on the other hand may consider on this present application are broad indeed. … As I said at the outset this morning, there is a balancing consideration involved in this exercise. The overall consideration is, I think, the ascertainment of that which is just and expedient in the circumstances of this case, and that is to regard the question from the point of view of the fairness and justice to all parties, both named and within the present group definition.

The determination of what is just requires consideration of the impact of the amendment on all parties and all group members. Where group members are to be excluded by amending the group definition, consideration must be given to the impact of the group members no longer being included in the class action. In Rod Investments, Hansen J referred to the group members still having the right to sue after being excluded, the limitation period starting to run again and any excluded group members who commenced individual proceedings being responsible for their own legal costs (as compared to in a class action when only the representative party is liable for costs). In Capic v Ford Motor Company (No 2) [2016] FCA 1178, Perram J recognised that difficult issues could arise where orders are sought to reduce the size of a class. His Honour noted that the court would need to be satisfied, generally, that the interests of those group members who were to be removed had been adequately addressed: at [28]. However, in that case, his Honour noted an agreement between the applicants and the respondents that the particular group members did not have [page 175] a viable case, which was a factor that ‘would appear to weigh heavily in favour of the view that such claims have no value’: at [29]. His Honour granted leave to amend the group definition.

Group Member Amendment and Class Closure for the Purposes of Settlement 11.8

The courts have demonstrated a willingness to invoke s 33K where

the amendment to the group definition is made for the purposes of promoting settlement. 11.9 In Sherwood v Commonwealth Bank of Australia (No 5) [2015] FCA 688, the parties reached an agreement to settle the proceedings, which included removing ‘excluded persons’ and ‘nil offerees’ from the settlement. In summary, the excluded persons and nil offerees were individuals who were involved in the alleged misconduct the subject of the proceedings. The applicants sought leave pursuant to s 33K to amend the group definition to remove those individuals. Collier J found it was reasonable to amend pleadings to exclude ‘excluded person and nil offeree’ on the basis that such persons were linked to conduct giving rise to representative proceedings. Collier J observed (at [22]): In the present case no persons who would be excluded from the settlement on the basis that they fall into the category of either an Excluded Person or a Nil Offeree have filed a notice of objection opposing the application for leave to file a ninth further amended statement of claim by the applicant. Further, and importantly, no such person would be deprived of their existing rights against the respondents notwithstanding the settlement of the proceedings agreed between other group members and the respondents (cf observations of Hansen J in Clark (No 3) at [13]).

11.10 In Clurname Pty Ltd v Commonwealth Bank of Australia (No 1) [2015] FCA 153, the applicants sought leave to amend the group definition by removing institutional investors and those who had previously settled their claims with the bank. This was a precondition of settlement reached between the applicants and the bank. Two institutional investors and a settled investor objected to the amendment. Foster J granted leave to amend the group definition, notwithstanding the exclusion effect of those orders. He observed that such an amendment was necessary to achieve settlement of the proceeding (at [62]): In the end, it seems to me that the choice is stark. Either the court makes the order as sought and facilitates a settlement for a majority of the members of the group (being a settlement which is likely to receive the support of the lawyers for the applicants) and leave to their own actions the claims of the institutional investors and the settled investors or the court refuses to make the class amendment order and, as a result, will almost certainly stultify all prospects of settlement. In the circumstances, I have decided to make the class amendment order.

[page 176] 11.11 Further, in Farey v National Australia Bank Ltd [2014] FCA 1242, in a closed class proceeding, Jacobson J used s 33K (and s 33ZF) to ‘open’ a closed class proceeding, and then after a notification period ‘close’ the class eligible to participate in any settlement sum. 11.12 An interesting question arises as to whether an amendment to the group definition which results in the exclusion of group members from the proceedings amounts to a discontinuance of those claims and requires approval under s 33V: Bray v F Hoffman-La Roche Ltd at [18], [23]; Matthews v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v United Services Corporation Ltd (Ruling No 13) (2013) 39 VR 255; Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74. Section 33V is discussed in detail in Chapter 22. However, Merkel J in Bray observed (at [29]): … whether approval is required under s 33V or leave is required under s 33K or under O 6 and O 13, a court would be concerned to ensure that an appropriate case is made out for the grant of approval or leave having regard to all the circumstances of the case. In determining whether an appropriate case has been made out in the present case I can see no reason for applying different criteria depending on whether the application is for approval or leave.

Rule in Eshelby’s Case 11.13 In Eshelby v Federated European Bank Ltd [1932] 1 KB 254 (Eshelby’s case), it was held that a new cause of action could not be pleaded if the facts giving rise to that cause of action did not exist at the date the writ was issued. This was a corollary of the rule that a proceeding could not be commenced in respect of a cause of action which had not accrued: Whirlpool (Aust) Pty Ltd v Discount Electrical Centre (Aust) Pty Ltd [1999] FCA 912. Section 33K(2) appears to have been adopted to overcome the rule in Eshelby’s case as otherwise putative group members whose cause of action arose after the commencement of the representative proceeding would be

excluded and need to commence a separate proceeding. This would be contrary to the efficiencies that representative proceedings seek to achieve. 11.14 Court rules have also sought to overcome the rule in Eshelby’s case: Federal Court Rules 2011 (Cth) r 8.21(g) (amending an originating application), r 15.15(1)(g) (amending a cross claim) and r 16.51(4) (amending pleadings) allow for amendments. Rule 8.21(g) provides: (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: …

[page 177] (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises: (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding.

Further, r 16.51(4) provides: ‘An amendment may be made to plead a fact or matter that has occurred or arisen since the proceeding started’.

Interaction with Other Powers of Amendment 11.15 As referred to above in relation to the rule in Eshelby’s case, there are a number of court rules which also allow for amendment that could be used to add or remove group members from a representative proceeding. In Revian v Dasford Holdings [2001] FCA 777 at [9], Nicholson J observed: S 33K(1) of the Federal Court Act provides that the Court may at any stage of a representative proceeding, on application made by the representative party, give leave to amend the application commencing the representative proceeding so as to alter the description of the group. That is a specific power of amendment contained in Pt IVA relating to representative proceedings. Given that the power to which it relates concerns a specific aspect of representative proceedings (namely, the description of the group) I do not

consider that the presence of that power in that section precludes the application of the powers arising under FCR O13.

See also Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 3) at [54]. 11.16 These general rules of amendment have been cited as a source of power to make amendments to the pleading (and group definition) in representative proceedings: see Bray v F Hoffman-La Roche Ltd at [28]; Asquith Rugby League Club Ltd v Capital Finance Australia Ltd [2011] FCA 110; Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd at [34].

Applications by Respondents/Defendants 11.17 Section 33K is drafted so that only the representative party may approach the court for an order amending the description of the group. If a respondent/defendant needed to make an application for an amendment to the group definition it would need to rely on s 33ZF: P Dawson Nominees Pty Ltd v Multiplex Ltd (2007) 242 ALR 111 at [55]; Darcy v Medtel Pty Ltd [2002] FCA 925. [page 178]

• CASE LAW • 11.18

Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 (Merkel J)

The applicant commenced a representative proceeding under Federal Court of Australia Act 1976 (Cth) (Federal Court Act) s 33C claiming damages and other relief in respect of an international price fixing and market sharing arrangement by certain companies in the Hoffman-La Roche, Aventis and BASF groups of companies (‘the cartel arrangement’). The cartel arrangement, which related to vitamin products manufactured and sold by

parties to the cartel arrangement or their subsidiaries for human and animal consumption, gave rise to prosecutions in the United States, Canada and Europe and pecuniary penalty proceedings in Australia. A number of companies pleaded guilty to the charges or admitted liability. The proceeding was originally brought on behalf of group members, who were defined as (at [2]): … persons who between 5 March 1992 and 5 July 1999 purchased in Australia all or some of vitamins A, B1, B2, B5 (Pantothenic Acid), B6, B9 (folic acid), B12, C, E, Beta Carotene, Canthaxanthin, Astaxanthin …, either directly or indirectly by way of the purchase of foods, beverages, vitamin pills or capsules or other products which contained one or more class vitamins supplied by one or more of the respondents …

Amendments were proposed that would confine the claims to certain animal nutrition and health vitamins and narrow the definition of group members to manufacturers, distributors and suppliers of those vitamins or pre-mix or other health or nutrition products or food which contain the vitamins, and producers of livestock who purchased stock feed containing vitamins, provided those group members expended at least $2000 in respect of the relevant products: at [9]. The proposed amendments were notified to 285 known group members by letter and a notice to other group members was published in major daily newspapers throughout Australia. Group members who were to be excluded from the representative proceeding by reason of the narrowing of the class were informed of their entitlement to commence a separate representative or individual proceeding if they wished to do so and their ability to appear at the hearing on the application to amend the group definition. Merkel J observed that ‘the main issue is whether the applicants have made out a case to justify the approval or leave they seek’. To support the application, senior counsel for the applicant filed an affidavit by the applicant’s solicitor which exhibited a memorandum prepared by two of the applicant’s solicitors which explained why the amendments were being sought. The memorandum explained [page 179]

the logistical and other difficulties confronting the solicitors for the applicant in relation to prosecuting the proceeding, as presently formulated, to trial. The memorandum’s conclusions were: there was a serious risk of the applicant losing on some of the claims, particularly in relation to human-use vitamins; a reformulation of the case so as to minimise the risk of losing on some claims, and potentially having to pay costs in relation to those claims, was reasonable and appropriate; the amendments sought were in the interests of the applicant and the group members as an applicant could seek an order that successful group members reimburse it in respect of costs payable as a result of an adverse costs order; the complexities and difficulties of proof and establishing loss in respect of the claims in respect of human-use and some animal-use vitamins and other difficult factual and legal questions concerning those claims made it reasonable and appropriate to excise claims in respect of those vitamins from the proceeding; the United States experience in respect of claims by individual consumers, which suggested the total ‘loss’ suffered by an individual consumer was likely to be small, made it reasonable to excise the claims of any consumers from the proceeding and to also exclude small claims by commercial purchasers; as the present applicant was an end consumer of human vitamins it was appropriate for group members who were substantial purchasers of animal vitamins to be substituted as the representative parties. Merkel J was satisfied that the application for leave to amend the application and the statement of claim was bona fide, made on reasonable grounds and that the memorandum made out a reasonable case in favour of allowing the proposed amendments: at [35].

11.19

Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 (Perram J)

This case concerned an application to amend the group definition in a representative proceeding arising out of the destruction of Malaysian Airlines Flight MH17 over Ukraine on 17 July 2014. As the group definition was contained in a statement of claim rather than an originating application, the power in s 33K to amend a group definition was not enlivened. The power to amend the group definition in a statement of claim is found in Federal Court Rules 2011 (Cth) r 16.53. Rule 16.53 provides: 16.53 Application for leave to amend Unless rule 16.51 applies, a party must apply for the leave of the Court to amend a pleading.

[page 180] However, the general power to amend a pleading operates in parallel to r 8.21, which deals with the amendment power relating to originating applications, which provides: 8.21 Amendment generally (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: … (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises: (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding. … (2) An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started. … [Emphasis added]

Accordingly, in order to enliven the power in Federal Court Rule 16.53 to amend a group definition, an application will need to bring themselves within Federal Court Rule 8.21(g): Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [29]. The court found that the general power of amendment had been enlivened. However, both s 33K and Federal Court Rule 16.53 are silent about when an amendment made under them is to take effect. Perram J observed (at [18]–[19): It has long been accepted, however, that the usual position is that an amendment to a pleading or originating process takes effect from the commencement of the proceeding: Baldry at 419. On the other hand, that principle does not apply where the effect of an amendment is to add a party: Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230 at [46]– [47] per Brereton J; Ketteman v Hansel Properties Ltd [1987] AC 189 at 200 per Lord Keith of Kinkel. Indeed, this latter principle is express in FCR 9.05(3) (although it refers to the date of the joinder order rather than the original filing date). Because the amendment of a class definition in a pleading does not involve the joinder of a party, it seems that it would be the former principle which would be applied rather than the latter.

[page 181] If the former principle were applied, so that the amendments took effect from the commencement of the proceeding (here 1 July 2016), this would appear to make relevant the so-called rule in Weldon v Neal (1887) 19 QBD 394. If the former principle were applied, so that the amendments took effect from the commencement of the proceeding (here 1 July 2016), this would appear to make relevant the so-called rule in Weldon v Neal (1887) 19 QBD 394. In that case, the plaintiff had sued in slander but after the expiry of the relevant limitation period had sought to amend her claim so as to add other claims including assault. The Court of Appeal held that the appeal should not be permitted. Lord Esher MR said at 395: We must act on the settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments. If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment, would be barred by the Statute of Limitations, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be, in my opinion, improper and unjust. Under very peculiar circumstances the Court might perhaps have power to allow such an amendment, but certainly as a general rule it will not do so.

This case comes within that rule of practice, and there are no peculiar circumstances of any sort to constitute it an exception to such rule. For these reasons I think the order of the Divisional Court was right and should be affirmed. [Emphasis added]

Perram J noted that the rule in Weldon v Neal has been widely ameliorated by statutory and rule changes. In the Federal Court, the effect of the former rules governing pleading amendments was to permit an amendment which was statute barred if it arose out of the same or substantially the same facts, to make an amendment date from the commencement of the proceedings and to confer an unfettered discretion on the court to choose some other effective date if it thought it expedient to do so: at [27]. While the old rules were replaced in 2011, the power to amend a pleading (and the time that the amendment takes effect) operates in the same way as the former rules: at [28]. This means that where an amendment is permitted, the power is discretionary and is accompanied by a power to order that the amendment in question takes effect from some day other than the filing of the original proceedings: Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [32]. Where the amendment to the group definition involves the addition of new group members, the general rule that an amendment which results in the addition of a new party takes effect from the date of the amendment is likely to apply, even though group members are not strictly a ‘party’ to the proceedings: see Brisbane [page 182] Broncos Leagues Club v Alleasing Finance Australia Pty Ltd; Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [33].

11.20

Blairgowrie Trading Ltd v Allco Finance Group Ltd (ACN 077 721 129) (recs & mgrs apptd) (in liq)

(2015) 325 ALR 539; [2015] FCA 811 (Wigney J) The applicants were unsuccessful in their application for an order that all group members be bound by the terms of the litigation funding agreement, whether or not they had signed up to the funding arrangements. In support of the orders, one argument advanced by the applicants was that if the order was not made it would not be commercially viable for the funder to fund the proceeding and they would then apply to the court to amend the group member definition to close the class and include only those persons who had entered into a funding agreement. The court was unpersuaded by the argument, and noted (at [176], [177]) that: … the applicants cannot in any event close the class without the leave of the court under s 33K(1). If, as the applicants appear to submit, the closing of the class would effectively shut group members out of the proceeding to their potential detriment, they may have difficulty in securing leave. In Bray v F Hoffman-La Roche Ltd [2003] FCA 1505, Merkel J made the following observations (at [15]) in the context of an application to narrow the definition of group members: [15] However, special problems arise when an amendment is sought to be made on behalf of an applicant in a representative proceeding under Pt IVA of the Act which will adversely affect the interests of some group members. In the present case the applicant has been placed in a situation of potential conflict between her interest in procuring the amendment and her duty to the group members whose interests may be adversely affected by it. A similar problem arises for the legal representatives of the applicant who have an obligation to conduct the representative proceeding on behalf of the applicant in a way that is consistent with the interests of group members, irrespective of whether those persons are clients of the solicitors: see King v AG Australia Holdings Ltd (2002) 121 FCR 480; 191 ALR 697; [2002] FCA 872 at [27] per Moore J. If it comes to it, the applicants and their lawyers will no doubt give careful consideration to their duties and obligations, and any potential conflict of interest, before deciding to apply for any narrowing of the group member definition. In any event, any such application will be considered by the court on its merits if and when it is made.

[page 183]

11.21

Capic v Ford Motor Company (No 2)

[2016] FCA 1178 (Perram J) The lead applicant commenced a class action identifying class members as persons who acquired affected vehicles fitted with power shift transmission, which were manufactured by Ford. The respondent, Ford Motor Company (Ford), denied the existence of any issues with diesel vehicles (as distinguished from petrol vehicles). The applicant sought to amend the group definition to remove owners of diesel vehicles, submitting that diesel vehicles were only included as a result of an error. Perram J observed (at [27]): The Court has power to grant leave to amend the description of the group: s 33K. Although the text of s 33K seems more particularly directed at the situation where additional group members are added, the text is wide enough to embrace reducing the size of a class as well.

Although Perram J explained the difficulty in many cases for the court to exercise its power to reduce the size of the class, he observed that (at [29]): In this case … [t]he agreement between Ford and Ms Capic’s lawyers that there was no such case would appear to weigh heavily in favour of the view that such claims have no value.

Further, although there had been six diesel vehicle owners who signed up for the class action at the time of the hearing, the applicant had made contact with those owners, filing affidavits which stated that (at [30]): In the case of five of them, they did in fact own petrol vehicles. In the case of one, a vehicle was owned which was not within the class definition at all.

As a result, the court found that it was proper to grant leave under Federal Court Act s 33K to amend the representative group in the manner sought by the applicant.

11.22

Sherwood v Commonwealth Bank of Australia (No 5) p[2015] FCA 688 (Collier J)

The applicants and other investors borrowed money from the respondent to invest in products recommended by Storm Financial. Storm Financial collapsed, with investors suffering financial loss. The parties reached a

settlement, which included an agreement to exclude from the definition of group members persons identified as ‘excluded person or nil offeree’ under deed of settlement. Consequently, the applicants sought an order for the approval of the settlement which required leave to amend the group description under Federal Court Act s 33K. [page 184] Persons identified as ‘excluded person or nil offeree’ did not make an objection to the proposed settlement. The court found it was reasonable to amend the pleadings to exclude ‘excluded person and nil offerees’ on the basis that such persons were linked to conduct giving rise to the representative proceeding. Collier J observed (at [22]): In the present case no persons who would be excluded from the settlement on the basis that they fall into the category of either an Excluded Person or a Nil Offeree have filed a notice of objection opposing the application for leave to file a ninth further amended statement of claim by the applicant. Further, and importantly, no such person would be deprived of their existing rights against the respondents notwithstanding the settlement of the proceedings agreed between other group members and the respondents (cf observations of Hansen J in Clark (No 3) at [13]).

In coming to the conclusion, Collier J observed (at [20]): In Rod Investments (Vic) Pty Ltd v Clark (No 3) [2007] VSC 306 the plaintiff made application pursuant to s 33K of the Supreme Court Act 1986 (Vic) (the Supreme Court Act) to amend the group description in a representative proceeding to exclude persons with familial and other connections to the defendants. I note that s 33K of the Supreme Court Act is in identical terms to s 33K of the Act. In discussing the matter and the application of the relevant Victorian legislation, at [10] Hansen J observed, in summary that: The range of considerations to which the court could have regard in respect of s 33K were broad. Section 33K empowered the court to order that persons be excluded from the representative group. Section 33K empowered the court to consider what was the just and convenient way of the proceeding advancing through to judgment.

11.23

Clurname Pty Ltd v Commonwealth Bank of Australia (No 1) [2015] FCA 153 (Foster J)

The applicants invested in sophisticated financial instruments of the respondent. The statement of claim defined the group of applicants as an open class. The class representative conducted negotiations with the respondent and the parties agreed to settle claims upon fulfilment of conditions. The applicants sought leave under Federal Court Act s 33K to amend the class definition to exclude institutional investors and settled investors. The applicants claimed the amendment was necessary to effect approval of [page 185] settlement. The applicants also claimed the respondent was not willing to settle the proceedings if settlement included institutional investors and settled investors. One settled investor and two institutional investors filed objections to the amendment of class definition. Foster J granted leave for the representative class to be amended because, among other things, he observed that such an amendment was necessary for settlement (at [62]): In the end, it seems to me that the choice is stark. Either the court makes the order as sought and facilitates a settlement for a majority of the members of the group (being a settlement which is likely to receive the support of the lawyers for the applicants) and leave to their own actions the claims of the institutional investors and the settled investors or the court refuses to make the class amendment order and, as a result, will almost certainly stultify all prospects of settlement. In the circumstances, I have decided to make the class amendment order.

However, Foster J also ordered (at [64]): The one matter to which I intended to return is the question of limitations. I do have some concerns about the possibility that the bank will raise a limitation defence against excluded parties and that, notwithstanding the circumstance that time has not been running while the present proceeding is on foot, when I make the class amendment order, only a day or two

will be left within which the institutional investors and (possibly) the settled investors will be required to decide whether to bring a proceeding of their own and then to institute that proceeding. For this reason, in addition to requiring a commitment from ILP to relieve the excluded members of the class from any contingent liabilities under the litigation funding deeds which those members have with that organisation, I will also require the bank to undertake to the court to accept that time will not run against excluded members for a period of 30 days from today, so that excluded members of the class will have sufficient time properly and adequately to consider their position.

11.24

Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2010] FCA 1302 (Tracey J)

The applicant alleged that the airline respondents were members of a cartel which had agreed to and did fix charges for international airfreight moving into and out of Australia. It was alleged that, in about January 2000, the respondents and other airfreight carriers had agreed that each of them would fix and maintain charges and conceal their agreement from others including the applicant and relevant group members. Prices were increased by the imposition of an agreed fuel surcharge, a security surcharge and a war-risk surcharge. [page 186] The applicant applied to vary the terms of its definition of ‘group member’ appearing in its second amended application and fourth amended statement of claim. The variation would see the words appearing in italics being added to the definition such that it would read: The group members to whom this proceeding relates (‘the Group Members’) are all those persons currently resident in Australia who during the period 1 January 2000 to 11 January 2007 (‘the Period’) paid identified amounts totalling more than twenty thousand Australian dollars (AUD$20,000) for the carriage of goods to or from Australia including in each instance a component by air and who are not related parties to the Respondents or any of them within the meaning of the Corporations Act.

These amendments were made in an attempt to rectify problems with the definition identified in Auskay International Manufacturing & Trade Pty Ltd v

Qantas Airways Ltd (No 5) [2009] FCA 1464 at [51]–[62], [64]. The problems related to the difficulty which a potential group member might experience in determining whether it fell within the definition. In order to determine whether they had made relevant payments during the period exceeding $20,000, potential group members were required to examine invoices rendered by freight forwarders and others. A sampling of such invoices which had been paid by Auskay disclosed that they were rendered for ‘freight charges’. No distinction was drawn in the invoices between the air and land component of such charges. A recipient of such invoices could not, therefore, know how much of the amount charged could be brought into account for the carriage of goods by air, so as to be able to determine whether or not the $20,000 figure had been exceeded. The amendments proposed by the applicant overcome the above difficulties. The respondents did not suggest otherwise. The court granted leave to amend the group definition.

[page 187]

CHAPTER 12 Court Powers Concerning Group Membership: s 33KA (Vic Only) • OVERVIEW • The operation of s 33KA was summarised by the High Court plurality, Gaudron, Gummow and Hayne JJ, in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 at [41] as follows: The Court, on the application of a party to the proceeding, or of its own motion, may at any time, before or after judgment, order that a person cease to be, or not become, a group member. The circumstances in which the Court may make such an order are stated in very wide terms. It may do so if it is of the opinion that the person does not have ‘sufficient connection with Australia to justify inclusion as a group member’, or that for any other reason it is ‘just or expedient’ that the person should not be or become a group member.

There is no equivalent provision in the federal, New South Wales or Queensland legislation.

• LEGISLATION • Section 33KA, Supreme Court Act 1986 (Vic) Court powers concerning group membership (1) On the application of a party to a group proceeding or of its own motion, the Court may at any time, whether before or after judgment, order— (a) that a person cease to be a group member; (b) that a person not become a group member.

(2) The Court may make an order under subsection (1) if of the opinion that— (a) the person does not have sufficient connection with Australia to justify inclusion as a group member; or (b) for any other reason it is just or expedient that the person should not be or should not become a group member. (3) If the Court orders that a person cease to be a group member, then, if the Court so orders, the person must be taken never to have been a group member.

[page 188]

• COMMENTARY • Statutory Construction 12.1 The power to order that a person become or cease to be a group member is said to confer a very broad power: Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 (Mobil Oil) at [41] per Gaudron, Gummow and Hayne JJ, at [162] per Callinan J; Clarke v Great Southern Finance Pty Ltd (in liq) (No 2) [2012] VSC 338 at [4]. In Mobil Oil, Gleeson CJ summarised the operation of s 33KA as follows (at [5]): Under s 33KA(1) the Court has a discretion to order that a person cease to be a group member, or not become a group member. That discretion arises when the Court is of the opinion that either the person does not have a sufficient connection with Australia to justify inclusion as a group member or for any other reason it is just and expedient that the person not be or become a group member. This confirms that connection with Victoria is not a test for inclusion in the group and that the location of persons outside Victoria, or even outside Australia, is not necessarily a barrier to their inclusion.

According to Gleeson CJ, the power in s 33KA(1) is therefore dependent on the conditions in s 33KA(2) being satisfied. The approach was also adopted by Kirby J at [127].

‘Just or Expedient’ 12.2 In Rod Investments (Vic) Pty Ltd v Clark (No 3) [2007] VSC 306 (Rod Investments), Hansen J, dealing with an amendment that would reduce the size of the group by excluding certain group members, observed in relation to ss 33K and 33KA (at [10], [15]): It is axiomatic, I think, in the determination of these submissions, and indeed of all that was submitted, to consider what is the just and convenient way of the proceeding advancing through to judgment. The considerations which the plaintiff on the one hand and the court on the other hand may consider on this present application are broad indeed. … As I said at the outset this morning, there is a balancing consideration involved in this exercise. The overall consideration is, I think, the ascertainment of that which is just and expedient in the circumstances of this case, and that is to regard the question from the point of view of the fairness and justice to all parties, both named and within the present group definition.

The determination of what is just requires consideration of the impact of the amendment on all parties and all group members. Where group members are to be excluded by amending the group definition, consideration must be given to the impact of the group members no longer being included in the class action. In Rod Investments, Hansen J referred to the group members still having the right [page 189] to sue after being excluded, the limitation period proceeding to run again and any excluded group members who commenced individual proceedings being responsible for their own legal costs (as compared to in a class action when only the representative party is liable for costs). 12.3 In Clarke v Great Southern Finance Pty Ltd (in liq) (No 2) [2012] VSC 338 at [5], Croft J recognised the width of the power under s 33KA and then stated ‘the overall consideration is the ascertainment of what is just and expedient in the circumstances of the case’. Factors considered by Croft J included:

the existence of any abuse of process; the application of Anshun estoppel, including the risk of the administration of justice being brought into disrepute; efficiencies such as the resolution of common issues and avoiding multiple proceedings; the overarching purpose requiring consideration of cost and expedition; and prejudice to parties. 12.4 The operation of s 33KA arose again at settlement in the same proceedings: Clarke v Great Southern Finance Pty Ltd (in liq) [2014] VSC 569. 12.5 After the trial had concluded, the parties executed a deed of settlement. There were 1300 objectors to the settlement and some of those who objected to court approval also applied under s 33KA to cease to be a group member. Group members argued that a material change of circumstance had occurred by the inclusion of a term in the deed which, if approved, would deny them the opportunity to raise individual defences in subsequent proceedings. Judd J referred to a pre-trial decision of Croft J (Clarke v Great Southern Finance Pty Ltd (No 2) [2012] VSC 338 at [3]–[4]) in which his Honour said (at [23]): Section 33KA gives the Court a discretion to order that a person cease to be a group member, which discretion is exercisable in ‘very wide’ circumstances. The considerations to be reviewed in exercising the discretion are broad due to the width of the power under s 33KA. However, the overall consideration is the ascertainment of what is just and expedient in the circumstances of the case.

Judd J stated (at [24]–[26]): There are no prescribed circumstances in which these powers may be exercised, although some circumstances are readily apparent. For example, to maintain the integrity of the group by removing those who do not share an essential characteristic, or to prevent an abuse of process or unfairness. The power is obviously designed to be exercised by the court in the management of a proceeding which, although a group proceeding, is conducted by parties within the construct of the adversarial system. The powers granted under ss 33KA and 33ZF are not intended, in my view, to be invoked by group members

[page 190]

to avoid the binding effect of an adverse judgment or terms of settlement negotiated prior to judgment, once approved by the court. Group members have an adequate opportunity, and mechanisms, to protect their rights and interests. Provided the opt out notice is adequate to explain their risks, and facilitate an informed decision, it is the most important and potent mechanism. As in the present circumstances, group members also have an opportunity to oppose court approval of a compromise. The mere fact, however, that a group member makes an incompetent application under ss 33KA or 33ZF is no barrier to relief. After all, with notice of a complaint raising questions of fairness and justice, the court may act of its own motion. I will proceed on that basis.

Judd J concluded (at [52]–[53]): It should have come as no surprise to group members to find, as a term of the Deed of Settlement, the Bank would insist on their right to recover under the loan agreements. Group members were advised of the possibility of a negotiated settlement prior to the opt out deadline. No doubt they hoped for a different and better outcome. To permit a number of group members, dissatisfied with the terms of the Deed, to opt out would be inconsistent with the benefits they have enjoyed as group members throughout the trial. The term binding group members to repay loan obligations does not, in my view, constitute a material change in the scope of the group proceeding. Group members would be precluded from advancing new novel individual defences had the case proceeded to judgment. Thus, to include in the Deed a term precluding them from relitigating a challenge to loan obligations in the Deed, negotiated by the parties, cannot constitute a material change to the scope of the issues for final determination between the parties, nor was it inherently unfair.

Interaction Between s 33KA and s 33K 12.6 In Matthews v SPI Electricity Pty Ltd (Ruling No 13) [2013] VSC 17, orders were made to close the class, which required a redefinition of the group. Section 33K was relied on as the power allowing for the group to be redefined so as to only include those persons who had registered to participate in the group proceedings: at [12]. In considering the application for class closure, Forrest J examined the question of limitation provisions and their effect on persons with claims who do not register. This required analysis of s 33KA(3) in the context of power being exercised under s 33K (at [71]– [72]): All personal injury and dependency group members currently have the benefit of this

suspension of the limitation provisions [referring to s 33ZE], but what happens if a claimant does not register and is no longer a group member? Section 33KA(3) reads as follows:

[page 191] If the Court orders that a person cease to be a group member, then, if the Court so orders, the person must be taken never to have been a group member. So on one view the benefit of the s 33ZE suspension is lost retrospectively once a person is excluded from group membership. For my part, I would not regard s 33KA(3) as being applicable to an order made utilising the power under s 33K(1) to amend the group description. Section 33KA(3) applies to an order dealing with a specified group member who is removed from the class by an order made under s 33KA(1). For example, a particular group member may not reside in Australia and thus enliven s 33KA(2)(a) and warrant removal.

Forrest J’s reasoning supports a view that ss 33K and 33KA are independent.

• CASE LAW • 12.7

Clarke v Great Southern Finance Pty Ltd (in liq) (No 2) [2012] VSC 338 (Croft J)

Two respondents, the Bendigo and Adelaide Bank parties, sought orders under s 33KA and/or Supreme Court Act 1986 (Vic) s 33ZF that six persons cease to be members of certain group proceedings because those persons had raised defences in debt recovery actions commenced by the banks that were essentially the same as the claims being pressed in the group proceedings. The application was opposed. The respondents’ basis for the exercise of the court’s power was that the maintenance of both the group and individual proceedings was an abuse of process — ‘a well recognised class of “abuse of process” is where proceedings are instituted against a party in a second forum when there are proceedings against that party pending in another forum’: Re AWB Ltd No 10 [2009] VSC 566 at [264]–[284]; Moore v Inglis (1976) 50 ALJR 589; 9 ALR 509 and on appeal (1976) 136 CLR 677; 51 ALJR 207; Henry v Henry (1996) 185 CLR 571 at 591; [1996] HCA 51. The principles of Anshun estoppel were

also relevant where group members seek to maintain claims in the individual proceedings that are additional or different to the claims in the group proceedings. The court declined to exercise its discretion and exclude the group members from the group proceedings. The court reasoned (at [15]–[16], [17]–[18]): A critical matter that does, in my opinion, appear to be clear in the present context is that the Group Proceedings will — with a trial commencing on 29 October 2012 — be heard and determined before the hearing and determination of any of the individual proceedings — in whichever court the individual proceedings are now or in which they remain. Given significant

[page 192] commonality of issues — or at least likely critical issues — it is reasonable to expect that resolution of the Group Proceedings will assist in the complete resolution of the individual proceedings without trial, or by trial on a greatly reduced number of issues. On the basis of the principles and authorities to which reference has been made, I am of the opinion that it is more than likely that if any party, sought to pursue the individual proceedings involving issues determined by — or in the process of being determined by the Group Proceedings — the individual proceeding or proceedings would be stayed on the basis of abuse of process, Anshun estoppel or, perhaps, election depending on the particular circumstances. … For these reasons, having regard to the likely extent of common issues as between the Group Proceedings and the individual proceedings, the cost and expense involved in agitating these issues in separate proceedings and the risk of the administration of justice being brought into disrepute as a result of inconsistent findings, it is more than highly desirable that this situation be avoided if possible. The provisions of the Civil Procedure Act directed to achieving expedition and cost effectiveness in litigation also militate against a multiplicity of proceedings. A further consideration is that it is, in reality, the opponents of this application who bear the risk of not being able to agitate all aspects of their defences or counterclaims by electing to remain group members. The risk they run is that on determination of the Group Proceedings, they will not be permitted — on the basis of abuse of process, Anshun estoppel, election or perhaps on other bases — to pursue all or any aspects of their defences or counterclaims in the individual proceedings.

In respect of the final paragraph, compare the decision in Timbercorp Finance

Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11. See also Oliver v Commonwealth Bank of Australia (No 2) (2012) 205 FCR 540. See also the discussion in Royall v Croydon Hospital Pty Ltd [2013] VSC 453.

12.8

Clarke v Great Southern Finance Pty Ltd (in liq) [2014] VSC 569 (Judd J)

After the trial had concluded, the parties executed a deed of settlement. There were 1300 objectors to the settlement and some of those who objected to court approval also applied under s 33KA to cease to be a group member. Group members argued that a material change of circumstance had occurred by the inclusion of a term in the deed which, if approved, would deny them the opportunity to raise individual defences in subsequent proceedings. Judd J rejected the application, concluding (at [52]–[53]): It should have come as no surprise to group members to find, as a term of the Deed of Settlement, the Bank would insist on their right to recover under

[page 193] the loan agreements. Group members were advised of the possibility of a negotiated settlement prior to the opt out deadline. No doubt they hoped for a different and better outcome. To permit a number of group members, dissatisfied with the terms of the Deed, to opt out would be inconsistent with the benefits they have enjoyed as group members throughout the trial. The term binding group members to repay loan obligations does not, in my view, constitute a material change in the scope of the group proceeding. Group members would be precluded from advancing new novel individual defences had the case proceeded to judgment. Thus, to include in the Deed a term precluding them from relitigating a challenge to loan obligations in the Deed, negotiated by the parties, cannot constitute a material change to the scope of the issues for final determination between the parties, nor was it inherently unfair.

However, the decision appears to be influenced by a view that group members would potentially be estopped from raising individual issues in

subsequent proceedings, if a judgment was delivered. Judd J observed (at [49]–[51]): In my view there is material difference between the individual circumstances of a particular group member on a question of reliance to recover compensation, and what the applicants may be entitled to raise by way of a defence in recovery proceedings brought by the Bank. Individual circumstances, relevant to issues such as reliance, may be litigated following the conclusion of a group proceeding, including answers to common questions and perhaps the final resolution of all issues between the lead plaintiffs and the defendants. The resolution of such individual issues is a natural extension of the group proceeding, in which group members may be required to establish a basis for relief, or quantum. While it is true that the proposed individual defences might theoretically be raised in existing proceedings that have been stayed, this group proceeding was unusual. It took the form of a collective defence to the Bank’s rights of recovery under loan agreements. Existing and potential defences were subsumed in the group proceeding. That was the intended purpose of the group proceeding. The mere existence of a prior recovery proceeding brought by the Bank, or a counterclaim, does not assist the applicants. The nature of the group proceeding was defensive. The plaintiffs alleged that the loan agreements were void and unenforceable. The Bank contended to the contrary. Group members had an opportunity to opt out of the proceeding, insofar as they might wish to maintain a different or novel defence. Upon judgment, group members would be bound by answers to the common questions, and thereafter precluded from litigating other defences to the obligations under the loan agreements.

Clarke was decided before the High Court decision in Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11; 91 ALJR 37; [2016] HCA 44. While Timbercorp challenges some of the reasoning in Clarke, it is not clear to what extent that would impact the decision in respect of the s 33KA application.

[page 195]

CHAPTER 13 Fewer Than Seven Group Members: s 33L • OVERVIEW • Section 33L empowers a court where it appears likely that there are fewer than seven group members to either discontinue the proceedings as representative proceedings, or allow the proceedings to continue. The court may impose conditions in relation to those orders.

• LEGISLATION • Section 33L, Federal Court of Australia Act 1976 (Cth) Situation where fewer than 7 group members If, at any stage of a representative proceeding, it appears likely to the Court that there are fewer than 7 group members, the Court may, on such conditions (if any) as it thinks fit: (a) order that the proceeding continue under this Part; or (b) order that the proceeding no longer continue under this Part.

Section 33L, Supreme Court Act 1986 (Vic) Fewer than seven group members If, at any stage of a group proceeding, it appears likely to the Court that

there are fewer than 7 group members, the Court may order, on such conditions (if any) as it thinks fit— (a) that the proceeding continue under this Part; or (b) that the proceeding no longer continue under this Part.

Section 164, Civil Procedure Act 2005 (NSW) Situation where fewer than 7 group members If, at any stage of representative proceedings, it appears likely to the Court that there are fewer than 7 group members, the Court may, on such conditions (if any) as it thinks fit: [page 196] (a) order that the proceedings continue under this Part, or (b) order that the proceedings no longer continue under this Part.

Section 103I, Civil Proceedings Act 2011 (Qld) Fewer than 7 group members If, at any stage of a representative proceeding, it appears likely to the court that there are fewer than 7 group members, the court may, on the conditions it considers appropriate— (a) order that the proceeding be continued under this part; or (b) order that the proceeding no longer continue under this part.

• COMMENTARY • 13.1

Unlike s 33M or s 33N where the provisions contain within them

the reason for discontinuing the proceedings, s 33L is silent on why the proceedings should be discontinued apart from a decline in the number of group members below seven. It appears that s 33L is aimed at allowing a court to consider whether a representative/group proceeding remains appropriate when the number of group members is low. Considerations will include whether there are efficiencies to be granted or access to justice to be facilitated, or whether the proceeding becomes costly and unwieldy for no apparent advantage: Falfire Pty Ltd v Roger David Stores Pty Ltd [1996] FCA 1803 at [9]. The inquiry is very much fact dependent, turning on the nature of the claims to be resolved.

The Court ‘May’ 13.2 On its face, s 33L may be relied on by the court to act on its own motion. The provision is silent as to who else may rely on the provision but what is required is that ‘it appears likely to the Court’ that there are fewer than seven group members. It may be argued that the parties and perhaps even group members could bring the number of group members appearing to be less than seven to the court’s notice and request it to act upon that fact. The court is not mandated to take any particular action if the number of group members falls below seven. Rather, the court may make orders, on such conditions (if any) that the proceedings continue or no longer continue as representative/group proceedings. In Stoyef v Masu Financial Management Pty Ltd (No 2) [2008] FCA 1849 at [15]–[16], Lindgren J observed that if the number of group members had fallen below seven, ‘the proceeding did not thereupon automatically cease to be a proceeding under Pt IVA’; rather, an order of the court was required. Further, [page 197] even with s 33L enlivened, Lindgren J would have ordered that the proceeding continue under Pt IVA.

Fewer Than Seven 13.3 The requirement that there be seven or more group members for representative/group proceedings to be commenced is contained in s 33C. If the requirement of seven or more is not met at the time of commencement then the representative proceeding has failed to comply with one of the requirements for commencing a proceeding. This can be contrasted with the situation addressed by s 33L where the number of group members falls below seven after commencement, giving rise to the discretion contained in s 33L. The number of group members can decline after commencement due to group members opting out pursuant to s 33J or through settling their claims so that they no longer fall within the group definition: Stoyef v Masu Financial Management Pty Ltd (No 2) at [11]–[12]; Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 at [48]. It is also conceivable that group members could be removed from the proceedings through an alteration to the group definition pursuant to s 33K.

Demonstrating or Rebutting the Existence of Fewer Than Seven Group Members 13.4 For s 33L to be enlivened, the court must think it ‘likely’ that there are fewer than seven group members. Exactly how this knowledge is to be obtained by the court is not addressed in s 33L, but it may become apparent to the court on the receipt of opt-out notices or by a party raising the matter through evidence. Once that occurs it falls to an applicant to provide evidence that there are seven or more group members: Nixon v Philip Morris (Aust) Ltd (1999) 95 FCR 453; 165 ALR 515; [1999] FCA 1107; Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164 at 166; 149 ALR 261; Falfire Pty Ltd v Roger David Stores Pty Ltd [1996] FCA 853. 13.5 In .Au Domain Administration Ltd v Domain Names Australia Pty Ltd (2003) 202 ALR 127, the respondents argued that by reason of the compromise of some of the claims, the number of group members had fallen below the statutory minimum and, accordingly, the action should not be allowed to continue as a group proceeding. The court observed that despite the applicant not being required to name the group members, if the

representative party is challenged on the issue as to whether there are seven group members the applicant needs to respond (at [9]–[10]): In response to an allegation that the group members do not exceed seven, the applicant filed affidavits to show that when the proceeding was commenced at least eight individuals asserted that they were misled by one or other notice and had suffered loss and damage accordingly. The applicant does not know whether the claims of any of these individuals have been compromised so as

[page 198] to bring the identified number below seven. If the number has fallen below seven, the respondents may obtain an order under s 33L. Although the applicant has made an attempt to identify seven members of the group, it need not do so to satisfy s 33C(1)(a). Here, the nature of the action makes it likely that the number exceeds seven. The proposed amended statement of claim does not mention the number of persons to whom the notices were sent, but I have been told that many thousands were dispatched. I have evidence that some recipients claim they were misled by the notice. That is sufficient to enable an inference to be drawn that others may also have been misled in the same way. Indeed, it is likely that the total number will significantly exceed seven. Accordingly, the challenge to the constitution of the application is not made out.

Factors Relevant to Discretion 13.6 The factors relevant to the discretion to discontinue the proceedings as representative proceedings were discussed by Kiefel J in Falfire Pty Ltd v Roger David Stores Pty Ltd at [9]: There are now only three franchisees constituting the group. Where there are fewer than seven group members the discretion given by s 33L Federal Court Act, as to whether to continue the proceedings as representative in nature, is wide. It seems to me that factors such as costs, efficiencies, and whether the relief can be obtained by another mode, matters listed in s 33N(1), will be relevant. That section applies regardless of the number persons relevantly interested in the action. Is the position different when there are only a small number remaining in the group? I think it would be putting the matter too high to say that, by reference to s 33L, there is a presumption that such a proceeding requires more than seven persons. Much may depend upon the nature of the claims in the particular proceedings. But as a general rule s 33L must be taken as indicating that the continuation of the proceedings may not be appropriate to small groups. And it is not difficult to see why that might be the case, given the nature of representative proceedings, their wider effect and that the procedures set up to accommodate them are necessarily rather more complex than is usually necessary. It would follow in my view that an applicant in such a case ought be in a position

to show why it is necessary or preferable to continue the proceedings in their present form. In the present case the factors I have just referred to militate against their continuation. There was, on the other hand, nothing to which the applicant could point as a practical benefit flowing from their continuation. Even the state of the pleadings would not assist, since they are in such a rudimentary form.

Effect of Order — Continue/No Longer Continue 13.7 Section 33L provides that if the court is satisfied to the requisite level that there are fewer than seven group members, the court may either order that the proceedings continue, or order that the proceedings no longer continue as [page 199] representative/group proceedings. The existence of less than seven group members does not mandate the discontinuance of the proceedings: Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at [16]; Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304 at 315. The position where the court orders that the proceedings no longer continue as representative/group proceedings was set out by O’Loughlin and Drummond JJ in Silkfield Pty Ltd v James Wong [1998] FCA 1645 as follows (at 2): A proceeding commenced under Part IVA the Federal Court of Australia Act is a proceeding by and on behalf of the representative party with the super-added characteristic that it is also brought on behalf of the described group members. Where the Court determines that a proceeding commenced under Part IVA is not authorised by s 33C to be commenced as a representative proceeding or where it orders, under any of ss 33L, 33M or 33N, that a representative proceeding no longer continue under Part IVA, the effect of such a determination is to extinguish the representative aspect of the proceeding but to leave unaffected its character as a proceeding brought for the benefit of the representative party itself. The implication in each of ss 33L(b), 33M(c) and 33N(1) is that once an order terminating the representative character of a proceeding brought under Part IVA is made, that same proceeding continues, but as an action brought by and for the sole benefit of the representative party. What is implied in these provisions is expressly stated in s 33P(a).

The same approach was taken by Stone J in Dorajay Pty Ltd v Aristocrat

Leisure Ltd (2005) 147 FCR 394 at [94].

• CASE LAW • 13.8

Falfire Pty Ltd v Roger David Stores Pty Ltd [1996] FCA 853 (Kiefel J)

The proceedings were originally commenced under Federal Court of Australia Act 1976 (Cth) Pt IVA and the group members were described as ‘persons, firms and corporations who conducted a Roger David menswear and accessories store business in Australia as franchisees subsequent to 31 December 1992 from the shop locations listed in the Schedule to this Application’. At the time of commencement the group members numbered 35 or more. Subsequently, all but three group members opted out: two companies, Falfire Pty Ltd and Dang International Pty Ltd, and another franchisee, Mr Jean. The applicant sought to rely on s 33K to add seven individuals who were covenantors and guarantors to the companies’ franchise agreements by adding the following description: … or who are parties to the franchise agreements relating thereto as covenantors and guarantors of the obligations of the respective franchisees.

[page 200] 13.9 The respondent opposed the amendment to the group definition and invoked s 33L to support an exercise of the court’s discretion that the proceedings no longer continue as a representative proceeding, as there were now less than seven persons remaining in the group. The court found no proper basis for the grant of leave to amend the description of the group to take account of interests of the covenantors and guarantors. Consequently, the group remained at three persons. Turning to s 33L, the court found that the applicant had failed to show why it is necessary

or preferable to continue the proceedings in their present form and as a result the proceedings were discontinued as representative proceedings.

13.10

Stoyef v Masu Financial Management Pty Ltd (No 2) [2008] FCA 1849 (Lindgren J)

The applicant brought a representative proceeding on behalf of persons who were clients of a financial services business conducted by the respondent and who, in reliance on advice given by the respondent, invested in one or more promissory notes issued by Westpoint Corporation Pty Ltd (Westpoint). The Australian Securities and Investments Commission (ASIC) was representing the interests of the applicant and group members. The affidavit evidence filed in the proceedings showed that ASIC had identified 116 clients of the respondent. Of those 116 clients: four did not invest in any relevant Westpoint product; one did not receive advice from the respondent; 23 were part of a proceeding in another court; and two had commenced their own legal proceedings against the respondent. By reason of the group definition, these 30 clients were not within the group, leaving 86 clients who were group members. Following service of opt-out notices, 49 of those remaining 86 group members opted out, leaving only the applicant and 36 group members — a total of 37 individuals (86 minus 49). Further evidence established that 83 of the 86 original group members had reached a private settlement with the respondent (these included 49 group members who opted out). 13.11 Lindgren J stated that ‘It did not appear likely to me that there were fewer than seven group members. Only 49 group members opted out, thereby clearly ceasing to be group members’: at [10]–[11]. His Honour went on to explain (at [12]–[16]): I did not need to decide whether there are other ways in which a person can cease to be a group member, and if so what those other ways might be. The only other way that might be

suggested to be relevant here was that persons ceased to be group members because the fact of the settlements somehow

[page 201] signified that they no longer satisfied the definition of ‘group members’ in the originating process. The definition of the group members included as an element that they ‘suffered loss’. The terms of the settlements between Masu and the 83 group members were not in evidence. I did not infer that the terms of the settlements established that the 83 group members had not suffered loss as at the relevant time — the time of commencement of the proceeding. It was therefore my view that s 33L was not enlivened. Even if, contrary to my view just expressed, the number of group members had fallen below seven, the proceeding did not thereupon automatically cease to be a proceeding under Pt IVA. Since I did not make an order under s 33L, the proceeding continued to be a proceeding under that Part and it was appropriate that I entertain the motion for approval of the settlement. If I had thought that s 33L was enlivened, I would have ordered that the proceeding continue under Pt IVA and then approved the settlement. It would have served no useful purpose to order that it no longer continue under that Part …

[page 203]

CHAPTER 14 Cost of Distributing Money Excessive: s 33M • OVERVIEW • Section 33M provides a specific power for the discontinuation of a representative proceeding. It is available only where money relief is claimed. However, to date, it has not been successfully deployed as a basis for discontinuing a representative proceeding. The court must conclude that it is likely that the cost to the respondent of identifying group members and distributing to them the amounts claimed would be excessive compared to the likely total of those amounts. The focus is on a comparison of the total monetary relief sought and the respondent’s costs of distributing that relief to each group member. Section 33M does not focus on costs more generally, such as the cost to the civil justice system or the costs to the group members or on whether there might be a more efficient approach to the resolution of the dispute. Those issues are matters for s 33N and/or s 33ZF. Section 33M can only be invoked on the application of a respondent. The court is not empowered to act on its own motion, although it could of course rely on s 33ZF. The court may either direct that the proceedings no longer continue as a representative proceeding or stay that part of the proceeding that relates to the monetary relief which triggered the operation of the section. The latter approach may allow for some but not all claims for monetary relief to be pursued through a representative proceeding, or allow for injunctive or declaratory relief to be pursued through a representative proceeding.

• LEGISLATION • Section 33M, Federal Court of Australia Act 1976 (Cth) Cost of distributing money etc. excessive Where: (a) the relief claimed in a representative proceeding is or includes payment of money to group members (otherwise than in respect of costs); and (b) on application by the respondent, the Court concludes that it is likely that, if judgment were to be given in favour of the representative [page 204] party, the cost to the respondent of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts; the Court may, by order: (c) direct that the proceeding no longer continue under this Part; or (d) stay the proceeding so far as it relates to relief of the kind mentioned in paragraph (a).

Section 33M, Supreme Court Act 1986 (Vic) Distribution costs excessive If— (a) the relief claimed in a group proceeding is or includes payment of money to group members (otherwise than in respect of costs);

and (b) on application by the defendant, the Court concludes that it is likely that, if judgment were to be given in favour of the plaintiff, the cost to the defendant of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts— the Court may, by order— (c) direct that the proceeding no longer continue under this Part; or (d) stay the proceeding so far as it relates to relief of the kind mentioned in paragraph (a).

Section 165, Civil Procedure Act 2005 (NSW) Distribution costs excessive If: (a) the relief claimed in representative proceedings is or includes payment of money to group members (otherwise than in respect of costs), and (b) on application by the defendant, the Court concludes that it is likely that, if judgment were to be given in favour of the representative party, the cost to the defendant of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts, [page 205] the Court may, by order: (c) direct that the proceedings no longer continue under this Part, or

(d) stay the proceedings so far as it relates to relief of the kind mentioned in paragraph (a).

Section 103J, Civil Proceedings Act 2011 (Qld) Distribution costs excessive (1) This section applies if— (a) the relief sought in a representative proceeding is or includes payment of money to group members, other than for costs; and (b) on application by the defendant, the court considers it is likely that, if judgment were to be given in favour of the representative party, the cost to the defendant of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive, having regard to the likely total of those amounts. (2) The court may, by order— (a) direct that the proceeding no longer continue under this part; or (b) stay the proceeding so far as it relates to relief of the kind mentioned in subsection (1)(a).

• COMMENTARY • Purpose of s 33M 14.1 The objective of class action litigation when introduced into the Federal Court was to provide access to justice, to resolve disputes more efficiently, to avoid respondents facing multiple suits and the risk of inconsistent findings, and to reduce costs for the parties and the courts: Second Reading Speech by the Attorney-General, Australia, House of Representatives, Parliamentary Debates (Hansard), 14 November 1991 at 3176; Femcare Ltd v Bright (2000) 100 FCR 331 at [10]; Bright v Femcare Ltd (2002) 195 ALR 574 at [152]. Access to justice, efficiency and effectiveness

were key reasons put forward by the New South Wales Attorney-General for adoption of class action legislation in New South Wales: Second Reading Speech by the Attorney-General, New South Wales, Legislative Council, 24 November 2010. Frequently, these goals will work in harmony as the aggregation of claims allows smaller claims to be viably litigated in one proceeding. 14.2 However, the Australian Law Reform Commission (ALRC) inquiry which preceded the federal legislation received a number of submissions concerned that [page 206] small claims may impose a disproportionate expense on respondents. The insertion of s 33M in Pt IVA was aimed at addressing inefficiencies created by small claims imposing costs on respondents greater than the benefit to be provided to a group member by way of damages. The ALRC in its ‘Grouped Proceedings in the Federal Court’, Report 46 (1988) explained as follows (at [151]): The Commission accepts that, where many small claims are amassed, the associated cost of grouped proceedings (such as identification and distribution) could exceed the benefits gained by the group members. In principle this is undesirable. A primary goal of the proposed procedure is that of achieving legal redress where this can be done efficiently, rather than imposing punishment on a respondent. For these reasons, if the costs that the respondent would have to bear in relation to identification of group members and distributing to them any monetary relief would be excessive, having regard to the total amount in issue, the proceedings should not be grouped. The question when the costs of identification and distribution become excessive must relate, to some extent, to the amount of the claims. If the amounts claimed for each group member are low, and are almost matched by the costs of identification and distribution, the costs may well be seen by the Court to be excessive. If the amounts claimed are relatively high, then, although the costs of identification and distribution may be high, the Court may properly conclude that it is worthwhile to proceed. To preserve the rights of individual group members to conduct or to bring their own proceedings, the Court should have a range of options available to it. It should be able to separate, stay or dismiss any of the proceedings so far as they relate to monetary relief, without prejudice to any further claim by group members. Accordingly, there should be provision that where the cost of identifying group members, and distributing any monetary relief (being costs that will be borne by the respondent) would be excessive having regard to the total monetary relief likely to be ordered to be paid, the Court should have the option of

separating the proceedings, staying individual claims or dismissing such claims while preserving group members’ rights to pursue their claim individually.

These concerns have subsequently been criticised as undermining a key goal of class actions — namely, providing access to justice for small claims: Vince Morabito, ‘The Federal Court of Australia’s Power to Terminate Properly Instituted Class Actions’ (2004) 42(3) Osgoode Hall Law Journal 473 at 490. Lindgren J in Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 (although dealing with an application under s 33N) observed (at 538): [T]he policy of Pt IVA is that respondents should not benefit from the fact that individual claims are relatively small and that many group members might not consider it worth their while to litigate them on their own initiative.

14.3 The Victorian Law Reform Commission (VLRC) in its ‘Civil Justice Review’, Report 14 (2008) at 539–40, shed further light on the issue by setting out debate from the Australian Senate: [page 207] [T]he Australian Democrats had advocated an amendment to section 33M, which would have replaced the court’s power to terminate a class action proceeding in such circumstances with a power to order that class members not be paid. The proposed provision would have left the plaintiff with the option of continuing and seeking an order that all undistributed compensation be referred to a prescribed legal aid fund. Senator Sid Spindler, proposing the amendment, noted that its purpose was to ‘ensure that funds which have become available as a result of a successful action are not reclaimed by bodies of persons who have caused the damage but are put to a beneficial use’. However, the Democrats’ amendment was defeated, Senator Michael Tate (then Minister for Justice and Consumer Affairs) commenting: [A]lthough I can see the motive behind Senator Spindler’s concerns and do not say that they are completely without merit, I believe that the task of the court is to adjudicate between parties and to award compensation to an injured party in those cases where it is appropriate … if for one reason or another that compensation cannot be easily paid or persons cannot be paid to whom payment ought to be made, the defendant should not be disadvantaged. We do not believe it is right in a sense that the defendant be punished by having assets diminished simply because a payment cannot be made to those who otherwise would be entitled to receive a payment. [Commonwealth, Parliamentary Debates, Senate, 13 November 1991, 3034–5]

14.4 The approach taken in s 33M appears to be consistent with the latin maxim de minimis non curat lex (‘The law does not concern itself with trifles’), that is, some claims or losses are so small that they do not warrant being pursued. Opinions will differ as to where the line should be drawn as to which small claims should be assisted by a class action procedure and which are so small that the assistance should be withheld.

Onus 14.5 A respondent applying to the court for an order under s 33M must show that it is ‘likely’ that the cost to the respondent of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts. In Bray v F Hoffman-La Roche Ltd (2003) ATPR 41-906; [2002] FCA 1405, Merkel J declined to make an order under s 33M as he was not satisfied that the preconditions for the exercise of this power had been established. His Honour said (at [61]): Indeed, having regard to the magnitude of the fines already imposed in respect of one aspect of the cartel arrangement in Australia, it is likely that the amount of damages that is being claimed will be considerable. In the circumstances the Australian subsidiaries have not established that the cost of distributing damages is likely to be excessive as required by s 33M.

[page 208]

Cost of Distributing Damages Excessive 14.6 For a respondent to be able to succeed under s 33M it requires evidence of: group members’ likely recovery; and cost to the respondent of identifying the group member and distributing the recovery. In Australian Competition and Consumer Commission v Golden Sphere

International Inc (1998) 83 FCR 424; [1998] FCA 598, the Australian Competition and Consumer Commission (ACCC) brought proceedings in relation to a pyramid selling scheme. The ACCC had instituted the proceedings on its own behalf, but also in a representative capacity for those persons who had participated in the pyramid selling scheme. The respondents sought to rely on ss 33M and 33N (at 447): It was submitted that the Court should exercise its discretion under either s 33M or s 33N to bring this proceeding to an end. Such a discretionary power is reserved to the Court where it is of the opinion that the cost to the respondents of identifying group members and making distributions to them would be excessive ‘having regard to the likely total of those amounts’: s 33M; a similar power is reserved under s 33N where the Court concludes that costs would be excessive or that it is inappropriate that claims be pursued by means of a representative proceeding. This submission is entirely devoid of merit. Findings have been made against the respondents that they have knowingly engaged in breaches of the TPA: various sums of money, including an amount of $254,650, have been intercepted by the authorities and if this submission was accepted those moneys would be disbursed to the respondents. That is enough to dismiss this submission summarily.

14.7 Australian Competition and Consumer Commission v Internic Technology Pty Ltd (1998) ATPR 41-646; [1998] FCA 818 also provides some guidance as to s 33M, although the court made an order under s 33N that the proceeding not continue as a representative proceeding. The claims were for a maximum amount of US$150. The respondents submitted (at 237): Against the smallness of the maximum amount of loss of damage suffered, the respondents seek to draw attention to the cost of proving the suffering of the loss and damage. According to their submission: ‘To prove damage, the group members must prove that they acted on a misapprehension created by the conduct alleged: that is — they must establish that they were misled. Each group member must give evidence to that effect, and be cross-examined on that evidence. The prospect of witnesses coming from all over the world to make good a claim which cannot exceed $US150 is absurd. It should not be permitted’.

In that case, the respondents’ submission was based on s 33N and so the argument compared the costs of the litigation for each group member to the recovery that [page 209]

may be made. This can be contrasted with s 33M where the comparison would need to be between the respondents’ cost of identifying the group member and distributing the recovery on the one hand, and the recovery to be made by the group member on the other hand.

Effect of Order — Continue/No Longer Continue 14.8 The court may determine not to make an order under s 33M, it may direct that the proceeding no longer continue as a representative proceeding, or it may stay the proceeding so far as it relates to the payment of money to group members which grounded the finding that the recovery was too small compared to the cost of identifying group members and distributing the recovery. The position where the court orders that the proceedings no longer continue as representative proceedings was set out by O’Loughlin and Drummond JJ in Silkfield Pty Ltd v James Wong [1998] FCA 1645 as follows (at 2): A proceeding commenced under Part IVA the Federal Court of Australia Act is a proceeding by and on behalf of the representative party with the super-added characteristic that it is also brought on behalf of the described group members. Where the Court determines that a proceeding commenced under Part IVA is not authorised by s 33C to be commenced as a representative proceeding or where it orders, under any of ss 33L, 33M or 33N, that a representative proceeding no longer continue under Part IVA, the effect of such a determination is to extinguish the representative aspect of the proceeding but to leave unaffected its character as a proceeding brought for the benefit of the representative party itself. The implication in each of ss 33L(b), 33M(c) and 33N(1) is that once an order terminating the representative character of a proceeding brought under Part IVA is made, that same proceeding continues, but as an action brought by and for the sole benefit of the representative party. What is implied in these provisions is expressly stated in s 33P(a).

The same approach was taken by Stone J in Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394 at [94].

Cy-près 14.9 Section 33M may be seen as being in opposition to the use of a cyprès remedy: Victorian Law Reform Commission, ‘Civil Justice Review’, Report 14 (2008), pp 539, 552. The Victorian Law Reform Commission

recommended the availability of cy-près remedies in class actions but to date no action has been taken to implement this recommendation in Victoria. However, the cy-près debate did become a live issue in New South Wales. The Courts and Crimes Legislation Further Amendment Act 2010 (NSW) inserted Pt 10 into the Civil Procedure Act 2005 (NSW) so as to make representative proceedings available in New South Wales courts. The Civil Procedure Amendment (Supreme Court Representative Proceedings) Bill 2010 provided for the introduction of cy-près. Pursuant to s 178 of the bill, the court was to have a power to order a cy-près remedy [page 210] in circumstances where a plaintiff has been successful and a defendant has been ordered to create a fund to reimburse injured parties, but not all the moneys in the fund can practicably be distributed: Consultation Draft Civil Procedure Amendment (Supreme Court Representative Proceedings) Bill 2010, Discussion Paper, undated, pp 2–3. Submissions on the bill pointed out the inconsistency between s 33M and the availability of a cy-près remedy, as well as raising concerns that such a contentious alteration to class actions in Australia had not been sufficiently studied. The legislation that was ultimately enacted did not contain a cy-près provision. 14.10

For further discussion of cy-près remedies, see Chapter 26.

Alternative Orders 14.11 If the class action is thought to be an inefficient mechanism for litigating the claims, or orders may be required to try and make the class action proceed more efficiently, then recourse may be made to s 33N or s 33ZF.

• CASE LAW •

14.12

Bray v F Hoffman-La Roche Ltd [2002] FCA 1405 (Merkel J)

The applicant commenced a representative proceeding under Federal Court of Australia Act 1976 (Cth) s 33C claiming damages and other relief in respect of an international price fixing and market sharing arrangement by certain companies in the Hoffman-La Roche, Aventis and BASF groups of companies (the cartel arrangement). The cartel arrangement, which related to vitamin products manufactured and sold by parties to the cartel arrangement or their subsidiaries for human and animal consumption, gave rise to prosecutions in the United States, Canada and Europe and pecuniary penalty proceedings in Australia. A number of companies pleaded guilty to the charges or admitted liability. The respondents sought to rely on s 33M for the proceedings to be discontinued as representative proceedings. Merkel J declined to make an order under s 33M as he was not satisfied that the preconditions for the exercise of this power had been established. His Honour said (at [61]): Indeed, having regard to the magnitude of the fines already imposed in respect of one aspect of the cartel arrangement in Australia, it is likely that the amount of damages that is being claimed will be considerable. In the circumstances the Australian subsidiaries have not established that the cost of distributing damages is likely to be excessive as required by s 33M.

The case was appealed to the Full Federal Court (Bray v F Hoffman-La Roche Ltd (2003) 200 ALR 607; [2003] FCAFC 153) but not in relation to s 33M.

[page 211]

CHAPTER 15 Proceedings not Continue as Representative Proceedings: s 33N • OVERVIEW • Section 33N gives the court a general discretion to order, of its own motion or on the application of a respondent, that a proceeding no longer continue as a representative proceeding.

• LEGISLATION • Section 33N, Federal Court of Australia Act 1976 (Cth) Order that proceeding not continue as representative proceeding where costs excessive etc. (1) The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because: (a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or (b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or (c) the representative proceeding will not provide an efficient and

effective means of dealing with the claims of group members; or (d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding. (2) If the Court dismisses an application under this section, the Court may order that no further application under this section be made by the respondent except with the leave of the Court. (3) Leave for the purposes of subsection (2) may be granted subject to such conditions as to costs as the Court considers just.

[page 212]

Section 33N, Supreme Court Act 1986 (Vic) Proceeding not to continue under this Part (1) The Court may, on application by the defendant, order that a proceeding no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because — (a) the costs that would be incurred if the proceeding were to continue as a group proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or (b) all the relief sought can be obtained by means of a proceeding other than a group proceeding; or (c) the group proceeding will not provide an efficient and effective means of dealing with the claims of group members; or (d) it is otherwise inappropriate that the claims be pursued by means of a group proceeding. (2) If the Court dismisses an application under this section, the Court may order that no further application under this section be made by the defendant except with the leave of the Court. (3) Leave for the purposes of subsection (2) may be granted subject to

such conditions as to costs as the Court thinks fit.

Section 166, Civil Procedure Act 2005 (NSW) Court may order discontinuance of proceedings in certain circumstances (1) The Court may, on application by the defendant or of its own motion, order that proceedings no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because: (a) the costs that would be incurred if the proceedings were to continue as representative proceedings are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding, or (b) all the relief sought can be obtained by means of proceedings other than representative proceedings under this Part, or (c) the representative proceedings will not provide an efficient and effective means of dealing with the claims of group members, or (d) a representative party is not able to adequately represent the interests of the group members, or (e) it is otherwise inappropriate that the claims be pursued by means of representative proceedings. [page 213] (2) It is not, for the purposes of subsection (1)(e), inappropriate for claims to be pursued by means of representative proceedings merely because the persons identified as group members in relation to the proceedings: (a) do not include all persons on whose behalf those proceedings might have been brought, or (b) are aggregated together for a particular purpose such as a litigation funding arrangement. (3) If the Court dismisses an application under this section, the Court

may order that no further application under this section be made by the defendant except with the leave of the Court. (4) Leave for the purposes of subsection (3) may be granted subject to such conditions as to costs as the Court considers just.

Section 103K, Civil Proceedings Act 2011 (Qld) Discontinuance of proceeding in particular circumstances (1) The court may, on application by the defendant or on its own initiative, order that a proceeding no longer continue under this part if it considers it is in the interests of justice to do so because— (a) the costs that would be incurred if the proceeding were to continue under this part are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or (b) all the relief sought can be obtained by way of a proceeding other than a proceeding under this part; or (c) the proceeding will not provide an efficient and effective way of dealing with the claims of the group members; or (d) a representative party is not able to adequately represent the interests of the group members; or (e) it is otherwise inappropriate that the claims be pursued by way of a proceeding under this part. (2) For subsection (1)(e), it is not inappropriate for claims to be pursued by way of a proceeding under this part merely because the persons identified as group members for the proceeding— (a) do not include all persons on whose behalf the proceeding might have been brought; or (b) are aggregated together for a particular purpose including, for example, a litigation funding arrangement. [page 214]

(3) If the court dismisses an application under this section for a proceeding under this part, the court may order that no further application under this section be made by the defendant in the proceeding except with the leave of the court. (4) For subsection (3), leave may be granted subject to the conditions about costs the court considers just.

• COMMENTARY • Nature of the Provision 15.1 The key aspects of this provision were distilled by Forrest J in AS v Minister for Immigration (Ruling No 7) [2017] VSC 137 at [61]–[67]: First, the requirements of s 33C and s 33N are not to be conflated. Provided a claim satisfies s 33C (in that it either has not been challenged or any challenge has been defeated) then the provisions of s 33N (if invoked) dictate whether it can proceed to determination as a class action. Second, it is not necessary for the representative plaintiff’s claim to determine all, or for that matter even a substantial amount, of the identified common issues. Third, in carrying out the analysis under s 33N(1), it is necessary that the Court determine: (a) whether one of the conditions contained in s 33N(1)(a) to (d) have been satisfied; and (b) then, whether it is in the interests of justice to make an order of discontinuance in relation to that condition. Fourth, and this relates specifically to 33N(1)(c), it is necessary to consider whether the determination of the representative proceeding is an effective and efficient mechanism to resolve the common issue(s) relevant to the group members to give some utility or benefit to the case continuing to trial as a representative claim. The inquiry is wide and requires the Court to focus on what are (and are not) the commonality of issues agitated in the representative proceeding with those of the group members. Fifth, in terms of the analysis under s 33N(1)(c) in most, but not necessarily all, cases, it will be necessary to compare the utility of the representative plaintiff’s claim as against that of the prosecution of individual claims by group members. Sixth, the management of the trial in the context of the agitation of disparate issues which may be irrelevant to the claim of the representative plaintiff is a relevant consideration in determining whether to permit the proceeding to continue as a class action.

[page 215] Seventh, there is no prescribed time at which an application under s 33N should be made. The authorities, in general, demonstrate that such a determination should not be made until there is a full understanding of the representative plaintiff’s case and how it relates to both the common questions and the interests of the group members. It follows that such a determination may be made after the pleadings have closed, or once outlines of evidence have been exchanged (if that be ordered) or, for that matter, during or at the conclusion of the trial. What is important is that the Court is in a position to assess the requirements of s 33N(1) including, of course, that of it being in the interests of justice to terminate the representative proceeding.

Purpose of the Provision 15.2 The purpose of the provision is not to determine whether representative proceedings are validly commenced under s 33C: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 at [4]–[6] per Lindgren J. Rather, as the words of the provision suggest, s 33N is concerned with whether and when the court should order that proceedings ‘no longer continue’ as representative proceedings under Federal Court of Australia Act 1976 (Cth) (Federal Court Act) Pt IVA: see also Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515; [2005] FCA 138 at [16]. As Foster J stated in Silkfield Pty Ltd v Wong (1998) 90 FCR 152 at 156, s 33N ‘only comes into play after the gateway [ss 33C and 33H] is passed and the proceedings commenced’. His Honour’s comments on s 33N were later adopted by the High Court in Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at [35]. There is no requirement for there to be any kind of abuse of the Pt IVA process to be contemplated or found by the court. Nor is it intended as some kind of punishment on or reward of a party: Jonsandi Transport Pty Ltd v Paccar Australia Pty Ltd (No 2) [1999] FCA 1788 at [4]. 15.3 The provision permits the court a ‘much wider consideration, as to what purpose the representative proceeding might serve’: Bright v Femcare Ltd (2002) 195 ALR 574 at [130] per Kiefel J. In Guglielmin v Trescowthick (No 2) at [9], Mansfield J was guided by the Second Reading Speech to the

Federal Court of Australia Amendment Bill 1991, which introduced Pt IVA into the Federal Court Act: The purpose of the Amendment Act, as explained in the second reading speech, is twofold. First, Pt IVA is designed to provide a real remedy in situations where many people are affected and the total amount in issue is significant, but each person’s loss is small and not economically viable to recover in individual actions. The second purpose of the Amendment Act is to deal with the situation where the damages sought by each claimant are large enough to justify individual actions and where there are a large number of claimants (for instance shareholders or investors). Rather than having a large number of similar actions, the mechanism of representative proceedings was designed to allow for a more efficient process.

[page 216] In determining whether to make an order under s 33N, the court must have regard to comparator proceedings: what is the likely course and cost of proceedings if the action does or does not continue as a representative proceeding: see Bright v Femcare Ltd at [74], [76] per Lindgren J. It has been suggested that a consideration of the practical effect of determining the common questions in the proceeding ‘largely resolves the question whether it is appropriate that the proceeding continues as a representative one under s 33N’: Batten v Container Terminal Management Services Ltd [2001] FCA 1493 at [17]. That is because in considering the costs associated with the representative proceeding, other forms of proceedings, and the efficiency and effectiveness of the representative proceeding, demands a consideration of the utility that will be achieved for group members in the representative proceeding. The utility for group members is the determination of common questions through the representative party’s claim.

The Interests of Justice 15.4 Section 33N(1) grants the court the power to make orders discontinuing a proceeding under Pt IVA where it is satisfied that it is in the interests of justice to do so because of one or more of the reasons set out in paras (a)–(d). The interests of justice required by s 33N(1) ‘are not at large’;

rather, there must be a ‘causal link’ between the interests of justice and one or more of the grounds set out therein: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [185] per Jacobson J. It is implicit in that determination that the court ‘will consider whether it is in the interests of justice that the proceeding be determined as a nonrepresentative action, or as a number of such actions’, or perhaps no proceeding at all: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [127] per Jacobson J; at [24] per Lindgren J. 15.5 Whether or not it is in the ‘interests of justice’ to make an order under s 33N has to be weighed against the public interest in the administration of justice that favours representative proceedings, and that requires a consideration of the principal objectives of the Pt IVA procedure, which, in Bright v Femcare Ltd at [152], Finkelstein J described as: (1) to promote the efficient use of court time and the parties’ resources by eliminating the need to separately try the same issue; (2) to provide a remedy in favour of persons who may not have the funds to bring a separate action, or who may not bring an action because the cost of litigation is disproportionate to the value of the claim; and (3) to protect defendants from multiple suits and the risk of inconsistent findings.

As part of that determination, the court will have regard to the ‘interests of all parties’, including the likelihood that group members can or will pursue individual claims, and what the respondents are likely to face in the absence of the representative proceeding: see Gui Sen Huang v Minister for Immigration and Multicultural Affairs (1997) 50 ALD 134 at [139]; Tongue v Council of the City [page 217] of Tamworth [2005] FCA 124 at [2]–[6]; TMAC Pty Ltd v Thomas Ford Trading Pty Ltd [2010] FCA 445 at [30]; Carr v Commins Hendriks Pty Ltd [2016] FCA 1282 at [21]–[27]. The limited value of individual claims is not a ground to discontinue the representative proceeding (although see s 33M). In Bright v Femcare Ltd (2002) 195 ALR 574, Finkelstein J noted that, for at least some of the group

members, the size of individual claims was unlikely to justify incurring the risk of costs. In that sense, his Honour said, ‘it would be contrary to the interests of justice to make an order under s 33N’: at [158]. Having regard to his Honour’s decision in Bright v Femcare, in McBride v Monzie Pty Ltd (2007) 164 FCR 559, Finkelstein J observed that this ‘is an even stronger case, due to the quantum of the individual damages claims, where stopping the group proceeding would work a serious injustice’: at [21]. The fact that multiple proceedings have been commenced against the same defendant, in relation to the same or similar subject matter, is not a ground to discontinue a proceeding: Smith v Australian Executor Trustees Ltd [2016] NSWSC 17 at [22]–[23]. In this proceeding, Ball J held that (at [23]): … the fact that a defendant is exposed to additional costs does not itself demonstrate that multiple proceedings against it are oppressive and, in the normal case, it is not oppressive for different plaintiffs to bring proceedings against the same defendant arising out of the same or substantially the same facts.

Costs and Separate Proceedings 15.6 Section 33N(1)(a) provides a ground for the court to discontinue representative proceedings, where it is satisfied that it is in the interests of justice to do so, because the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding. To meet an application or the court’s motion under s 33N(1)(a) that proceedings be discontinued under this provision requires evidence of the likely costs and benefits of the proceeding continuing under Pt IVA: see Bright v Femcare Ltd at [74], [76] per Lindgren J; Hall v Australian Finance Direct (No 2) [2007] VSC 233 at [48]. It requires a comparison of the costs that would be incurred in other proceedings: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [126] per Jacobson J. 15.7 In Leung v American International Assurance Co (Aust) Ltd [2004] FCA 1763 at [38], Hill J observed that while some additional cost would be incurred in pleading each case individually, and for court fees:

… that additional cost ultimately would not seem to involve much difference from the costs that would be incurred if there were first some representative proceeding directed at establishing what must inevitably be a narrow common issue, but then investigating each separate factual matter, particularly where each matter could involve reinvestigating what was said to be the common issue in any event.

[page 218] In Gold Coast Council v Pioneer Concrete (Qld) Pty Ltd (1997) ATPR 41-585, Drummond J found that it was an appropriate circumstance to discontinue the proceedings under s 33N(1)(a), observing that, in this instance, it was likely that ‘the benefits to be derived, which are very likely to be confined to benefits to the applicant, will be very greatly outweighed by the costs burdens inflicted on the respondents’: at 44,083–4. In reaching this conclusion, his Honour observed that the applicant provided no evidence that such a complex and expensive proceeding (including a very large and costly discovery exercise) was ‘likely to produce benefits for anyone other than the applicant’, when that should be within the applicant’s capacity: at 44,083–4. In Bright v Femcare Ltd at [157]–[158], Finkelstein J noted that the court at first instance had erred in finding that individual proceedings would be more cost efficient than a representative proceeding. His Honour found that not only was there no sufficient foundation for such a finding, but that the primary judge had appeared to contemplate individual claims would be dealt with by the same judge, which could not be readily assumed. In Giles v Commonwealth [2014] NSWSC 83 at [138]–[139], Garling J considered arguments about the relative merits of individual claims compared to the class action as follows: As earlier noted, in addition to the two plaintiffs, their solicitors are presently aware of a further 65 group members, and the potential size of the entire group may well be in the many hundreds. If the Court was to hear each of these cases as individual cases, the call upon the Court’s resources would be very significant. The call upon such witnesses as are available to the defendants would also be significant. They may have to give similar evidence many times over, because there is a very real likelihood that the same witnesses would be called upon to give similar evidence in each individual case. The defendants submitted that, by the appropriate use of the procedure contemplated by

Part 28 of the UCPR, which would enable separate questions to be identified if individual proceedings were continued for each plaintiff and each group member (but were heard together in a single hearing where appropriate), the call upon judicial resources and resources of witnesses could be reasonably managed and minimised. That may be so, however, such a method of proceeding would not be able to bind any of the other potential claimants who are not yet specifically identified and whose claims would be determined by a representative proceeding under Part 10 of the Civil Procedure Act. It has no obvious benefit over a representative proceeding, and obvious disadvantages to a defendant.

All the Relief Sought can be Obtained by Means of a Proceeding Other Than a Representative Proceeding 15.8 Section 33N(1)(b) provides that representative proceedings may be discontinued where the court is satisfied that it is in the interests of justice to do [page 219] so because all the relief sought can be obtained by means of a proceeding other than a representative proceeding. Case law on this particular point is scarce. Jacobson J in Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [180] noted that the express terms of s 33N(1)(b) ‘would seem to apply to every representative proceeding’. In Carr v Commins Hendriks Pty Ltd, Rares J made an order under s 33N that the proceeding no longer continue in representative form on a number of grounds, including (at [26]): … all the relief sought by Mr Carr here can be sought in an ordinary inter partes proceeding, of the kind envisaged in s 33P(a) of the Federal Court Act.

The provision calls, in express terms, for a comparison of the relief that can be obtained in other proceedings: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [126] per Jacobson J. It also requires the consideration of relief available to the group members in the proceedings before the court. This requires some evidence to be placed before the court to meet this burden.

15.9 As with the other s 33N grounds, timing is relevant and the ‘interests of justice’ is required before the discretion can be exercised: Francey v Sharpe Development Group Pty Ltd [2005] FCA 1059 at [9]–[10]. In Hall v Australian Finance Direct (No 2) at [48], Hollingworth J emphasised the use of the phrase ‘all the relief’ in s 33N(1)(b), without commenting further. In Larsson v WealthSure Pty Ltd [2013] FCA 926 at [42], Buchanan J observed that, in those proceedings, there was no suggestion that group members should share from a common pool, but rather ‘individual orders are sought for individually calculated amounts to address individual losses’. Further, his Honour stated (at [42]): The proceedings are, in reality, proceedings which seek to vindicate the individual interests of a limited and known group of persons who might ordinarily be expected to advance their claims as applicants in their own right. They will be under no obligation to make an application to join the proceedings, but if they do so they may be expected to advance their own interests and take responsibility for what is said and done about their particular personal circumstances and transactions.

In those circumstances, it was appropriate to discontinue the proceedings under Pt IVA.

Representative Proceeding Will Not Provide an Efficient and Effective Means of Dealing with the Claims of Group Members 15.10 Section 33N(1)(c) provides the basis for discontinuance, in the interests of justice, of proceedings where the court is satisfied that the representative proceeding before it will not provide an efficient and effective means of dealing with the claims of group members. [page 220] Section 33N(1)(c) is concerned with the disposition of questions arising from the applicant’s pleading, and their effect: Bright v Femcare Ltd at [133] per Kiefel J. What is ‘efficient, effective or appropriate will obviously vary from case to case’: Hall v Australian Finance Direct (No 2) at [50].

Section 33N(1)(c) is not enlivened by the risk of multiple representative proceedings in circumstances where s 33C expressly permits claims to be brought by persons comprising less than the entire class of persons affected by the conduct and there is no evidence that other representative proceedings are on foot or imminent: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [174], [178] per Jacobson J. In contrast to s 33N(1)(d), which directs attention to whether group member claims are appropriately pursued by a proceeding under Pt IVA at all, s 33N(1)(c) directs attention to the particular proceeding on foot: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [15] per Lindgren J. 15.11 Whether a representative proceeding will provide an efficient and effective means of dealing with the claims of group members ‘almost certainly’ requires an assessment of the findings that may be made in the applicant’s case, the extent to which those findings would be likely to resolve the other claims, and the cost of doing so: Bright v Femcare Ltd at [128] per Kiefel J. If evidence required and findings given are likely to vary on an individual basis, it is difficult to conclude that a particular finding will have common application to the claims of an applicant and group members, and thus, that it is appropriate to continue with a representative proceeding: see Bright v Femcare Ltd (2002) 195 ALR 574 at [133] per Kiefel J. The number of findings which may have common application is not necessarily influential in the consideration of s 33N: Bright v Femcare Ltd at [136] per Kiefel J; Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd [2011] FCA 106 at [83]. Section 33N is ‘not to be approached as some sort of exercise in balancing the common issues against the individual issues, and seeing which is the heavier’; rather, the court should consider ‘whether there are common issues which the group proceeding can effectively and efficiently determine, before deciding what to do with any remaining, individual issues’: Hall v Australian Finance Direct (No 2) at [50]. In Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723 at 733, it was held that an order under s 33N may, however, be appropriate where: … the area of issues common to all claims is so limited, in comparison with the totality of the issues that have to be resolved both as to liability and relief, as between each of the group

members and the respondents, that the present proceedings so much involve an investigation of individual circumstances as to justify an order being made under s 33N that the proceeding no longer continue under Pt IVA of the Act.

In Carr v Commins Hendriks Pty Ltd, Rodney Carr commenced representative proceedings against his former solicitors, Commins Hendriks Pty Ltd, on the basis [page 221] of an allegedly unfair and misleading cost agreement. Whilst it was acknowledged that, as the law firm had entered into the same cost agreement with other clients, there were others who could have joined the proceeding as group members, none had done so. Rares J made an order under s 33N that the proceeding no longer continue in representative form on a number of grounds, including (at [27]): I am of opinion that a representative proceeding will not provide an efficient and effective means of dealing with the claims of group members. The fact that Mr Carr alone is put forward as a representative party suggests that the facts of his particular situation will not be sufficiently illustrative of the wide variety of potential factual situations that may affect relations between the solicitors and their other clients, including those in personal injuries actions, where solicitors often undertake work on the basis of no win no fee arrangement, albeit often with uplifts of fees in cases where they are able, ultimately, to charge based on legislation giving such rights. These factors suggest that these proceedings would not be a convenient or appropriate vehicle to determine wider issues than those that arise between Mr Carr and Commins Hendriks.

15.12 Timing is important, because it may not be possible to properly assess the effect of particular findings until a trial of at least some issues: Bright v Femcare Ltd at [129] per Kiefel J. For instance, as was the case in Zhang De Yong v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384, there might be utility in answering a threshold question for a defined group (for example, a question of law) but thereafter it may not be effective to deal with claims in the same way. While claims of common application can be identified which may ‘go a considerable distance towards resolving questions of liability’, a court is

unlikely to make an order discontinuing proceedings under s 33N: Milfull v Terranora Lakes Country Club Ltd (1998) ATPR 41-642 at 41,104. However, the court’s discretion is enlivened ‘when the point is reached that the proceeding will not provide an efficient and effective means of dealing with group member claims’: Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (No 3) [2009] FCA 5 at [39]. In Vasram v AMP Life Ltd [2000] FCA 1916, Stone J heard two initial questions and, having decided both of those in the negative, his Honour ordered that the proceedings no longer continue under Pt IVA, agreeing that, those being the only common issues found to exist, ‘there is no utility in the proceeding continuing as a representative proceeding’: at [21]. In Meaden v Bell Potter Securities Ltd (No 2) (2012) 291 ALR 482; [2012] FCA 418 at [4], the court had detailed regard to the pleading and the claims of the applicant and the types of claims which she purported to represent. Edmonds J found that, even after a trial of Ms Meaden’s case, there would be a ‘necessity for individual appearances by all remaining group members’, since determination of her claim would ‘offer no real guide’ as to the balance of the group members’ claims: at [65], [69]. Thus, allowing the proceeding to continue as a representative proceeding would only lead to difficulty and delay: at [70]. [page 222]

Otherwise Inappropriate 15.13 A court may make an order to discontinue proceedings under Pt IVA where it is satisfied that it is in the interests of justice to do so, because it is ‘otherwise inappropriate’ that the claims be pursued by means of a representative proceeding: s 33N(1)(d). This provision is often considered in conjunction with or as an alternative to the other sections: s 33N(1)(a)–(c). ‘Inappropriateness’ of a representative proceeding within the meaning of s 33N(1)(d) is not established by ‘pointing to a hypothetical different Pt IVA proceeding that the Court may consider “more appropriate”’: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [15] per Lindgren J. In

contrast to s 33N(1)(c), which directs attention to the representative proceeding ‘on foot’, s 33N(1)(d) ‘directs attention to the group members’ claims and poses the question whether it is appropriate that they be pursued by a proceeding under Pt IVA at all’: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [15] per Lindgren J. The court may therefore look to the purpose served by a continuation of the proceeding under Pt IVA, including the way in which the group is defined, even where that group definition satisfies the threshold requirements of s 33C: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [103], [107] per Jacobson J. 15.14 Although s 33N(1)(d) provides a wide discretion to discontinue proceedings, the ground does not extend to ‘practical disincentives’ to exercise the right to opt out: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [150] per Jacobson J. Nor does it permit the court to introduce a ‘quasi legislative rule’ with the effect of excluding from representative proceedings ‘groups defined by reference to accession to an agreement with a litigation funder’: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [1] per French J; see also Kirby v Centro Properties Ltd (2008) 253 ALR 65 at [38]. In Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR 41-679, in refusing to make an order under s 33N(1)(d), Merkel J observed that determination of the common issues by way of a representative proceeding was likely to ‘achieve the economic disposition of individual group members’ claims and the cost-effective use of legal resources, including legal resources, in disposing of an extraordinarily large number of claims’: at [55]. As with the other grounds under s 33N(1), the question of timing may also be relevant. In Zhang De Yong v Minister for Immigration, Local Government and Ethnic Affairs at 405, French J observed that while concerns about prejudice to the individual claims of group members could be dealt with by determining the common issue and giving judgment on that issue as required by s 33ZB, thereafter it may be appropriate to make an order under s 33N(1)(d) that the proceeding no longer continue under Pt IVA. [page 223]

Discretion 15.15 Section 33N is discretionary. Where its requirements are made out the court ‘may’ act, but is not required to do so: see Zhang De Yong v Minister for Immigration, Local Government and Ethnic Affairs; Falfire Pty Ltd v Roger David Stores Pty Ltd [1996] 853 FCA 1; Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512. The court must be satisfied that it is in the interests of justice for a proceeding not to continue under Pt IVA on one or more of the grounds specified in s 33N(1)(a)–(d) before the court can make an order to that effect: see Bright v Femcare Ltd at [74].

Relationship with s 33C 15.16 The appropriate starting point for a consideration of s 33N, and the statutory framework in which it sits, is s 33C: see Meaden v Bell Potter Securities Ltd (No 2) at [4]. Section 33C of the Federal Court Act is concerned with ‘the commencement, not subsequent conduct, of litigation using the procedures provided in Pt IVA’: Wong v Silkfield Pty Ltd at [26]. Section 33C(1) requires satisfaction of three conditions: numerosity (seven or more persons); connectivity (claims in respect of or arising out of the same, similar or related circumstances); and commonality (claims give rise to a substantial common issue of law or fact): see P Dawson Nominees Pty Ltd v Multiplex Ltd (2007) 242 ALR 111 at [14]. In considering ‘commonality’, the court must be satisfied that the common issues identified are ‘substantial’ in the necessary sense — being ‘real or of substance’: Wong v Silkfield Pty Ltd at [28], [30]. Finkelstein J in Green v Barzen Pty Ltd (formerly Dukes Financial Services Pty Ltd) [2008] FCA 920 at [15], noted that the ‘commonality’ requirement of s 33C requires ‘some substantial common issues’, and ‘does not involve looking at the quantity of the common issues alleged but at their quality’. In contrast, the quantity of

common issues as well as their quality may be relevant in an application under s 33N: Green v Barzen at [15]. 15.17 It is certainly possible that a proceeding was never, in fact, validly commenced under s 33C: see Meaden v Bell Potter Securities Ltd (No 2) at [6]– [7], citing Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd at [4], [6]; see also Femcare Ltd v Bright (2000) 100 FCR 331 at [107]. Or, as Stone J stated in Vasram v AMP Life Ltd [2000] FCA 1676 at [9], ‘[i]f there are no common issues then the proceeding is not properly commenced and is liable to be dismissed or the applicant’s pleading struck out’. That is, the matter ‘is not one of the court’s discretion under s 33N but of a failure to meet the threshold requirements of s 33C’: Vasram v AMP Life Ltd at [9]. [page 224] A proceeding which has satisfied the threshold requirements of s 33C may, nevertheless, subsequently be discontinued by an order under s 33N: see Wong v Silkfield Pty Ltd at [26], [29]; Bright v Femcare Ltd at [128] per Kiefel J. The relevant inquiry under s 33N is whether the court is satisfied that it is in the interests of justice that the proceeding no longer continue under Pt IVA on one or more of the grounds specified in s 33N(1)(a)–(d).

Section 33N and Case Management 15.18 Further relevant considerations in determining whether to exercise the discretion under s 33N are questions of the capacity of the court to manage the litigation and the public interest in whether it is an efficient and effective use of the court’s resources to hear and determine claims if they were mounted individually, as compared with a single class action: Giles v Commonwealth at [126]–[127], citing Guglielmin v Trescowthick (No 2) at [76]. In Giles at [146], Garling J concluded ‘there is a significant saving of judicial time in a single hearing of all common questions together with a consistent approach to case management procedures’.

15.19 See also Recommendation 150 of the Australian Law Reform Commission (ALRC) Report, ‘Grouped Proceedings in the Federal Court’, which states (at [150]): Grouped proceedings will sometimes be more complex and difficult to manage than other forms of litigation. The Court’s ability to control proceedings through directions hearings and taking a more active role in the management of the case will help to ensure that the costs incurred by the parties are less than the cost which would be incurred if the proceedings were all conducted as individual proceedings. However, there may be circumstances where the claims are so divergent or complex that the overall costs to the parties and to the administration of justice may be more than the combined cost of separate proceedings. Where the Court is unable to deal with the claims economically as compared with individual proceedings, the proceedings should be separated. The proceedings would remain on foot but each group member would become responsible for conducting his or her own claim. If group members did not assume conduct of their proceeding the respondent could apply to have their claims dismissed for want of prosecution. Dismissal should not prejudice an individual group member’s right to commence their own litigation. There should therefore be an express power for the Court to separate the proceedings if it finds that the costs of conducting the proceedings as one proceeding are likely to exceed the costs that would be incurred if the proceedings were conducted as separate proceedings.

15.20 Respondents may only have one opportunity to bring a s 33N application in a representative proceeding. The consequences of an unsuccessful s 33N application can include orders that no further application under the section be made by the respondent except with the leave of the court (s 33N(2)), and such leave can include court-imposed conditions (s 33N(3)). [page 225] 15.21 Sections 33L and 33M provide two further bases for the court to make an order that proceedings no longer continue as a representative proceeding: where there are fewer than seven group members (s 33L), or (on application by the respondent), the court concludes that it is likely that, if judgment were to be given in favour of the representative party, the cost to the respondent of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts (s 33M). The court has a vast array of powers to effectively manage a representative

proceeding with individualised issues before having to resort to the power contained in s 33N (and ss 33L and 33M). Section 33Q provides the court with a discretion to make directions in circumstances where it appears that determination of the issue or issues common to all group members will not finally determine the claims of all group members. The court may, pursuant to that section, give directions in relation to determination of the remaining issues, as well as to appoint sub-groups. This section sits alongside s 33R, under which the court may permit an individual group member to appear in the representative proceeding for the purpose of determining an issue that relates only to the claims of that group member. If such an order is made under s 33R, the individual becomes liable for costs associated with determination of that issue. The consequences of an order under s 33N (or s 33L or s 33M) that proceedings no longer continue as representative proceedings include that the (previous) representative party may continue its proceeding against the respondent/s, and anyone who was previously a group member may apply to the court for an order that it be joined as an applicant to the proceeding: s 33P.

Individual Circumstances and Common Issues 15.22 The fact that there remain ‘very substantial areas of factual dispute’, including questions going beyond the individual circumstances of the applicant, does not preclude the proceeding from continuing as a representative proceeding: Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (No 3) at [40]; Schanka v Employment National (Administration) Pty Ltd (1998) 86 IR 283 at 291; Giles v Commonwealth at [110] (‘it needs to be borne in mind that there is no necessary expectation that the representative proceedings will deal with all claims of all group members through to finality although the claims of the plaintiff (or plaintiffs) may be so dealt with’). There is obvious benefit in determining common issues even if there are a number of non-common issues: see Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd at [82]. More relevant, however, than the predomination in number of common issues over non-common issues is what the resolution of common claims in the representative action might mean for

the other claims, including in respect of taking advantage of a commonality in evidence (avoiding overlap): see Bright v Femcare Ltd at [136] per Kiefel J; Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd at [83]. [page 226] There may therefore be utility in a representative proceeding continuing as such under Federal Court Act Pt IVA until such time as a threshold question/s can be determined for the applicant and group members as a whole, and thereafter to be ‘de-classed’: see Bright v Femcare Ltd at [18] per Lindgren J; [129] per Kiefel J, referring to Zhang De Yong v Minister for Immigration, Local Government and Ethnic Affairs; see also Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26 at [7]. As Lindgren J explained in Bright v Femcare Ltd at [18]: … ordinarily one would expect that, in an attempt to give effect to the legislative intention, a means will be sought, by case management techniques, to enable a representative proceeding to continue to the stage of resolution of the substantial common issues on the basis that after that stage is completed, an order under s 33N or directions under s 33Q will be made.

This is entirely consistent with the rationale for a representative proceeding vehicle: that ‘the trial of one representative action will determine for all group members the common question or questions’ and, since any determination will bind all group members under s 33ZB, ‘[t]he efficacy of that process depends upon true commonality of issues’: Meaden v Bell Potter Securities Ltd (No 2) at [65].

Timing of Application 15.23 Case law suggests that it is ordinarily inappropriate for an order under s 33N to be made at an early juncture in the proceedings, particularly before the close of pleadings or before the court has considered the type of evidence proposed to be led on the common issues. A respondent will have a high burden to meet in such circumstances; the court may be more likely to consider an application favourably, for example,

if there is plainly a ‘lack of utility’ in representative proceedings (Milfull v Terranora Lakes Country Club Ltd at 41,105) or if there is an ‘incompatibility or conflict between [a] representative party’s case and the cases of the represented parties’: Bright v Femcare Ltd at [18], referencing Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 464. It may also be the case that there is only one substantial common issue, for example one of law, that is necessary and applicable to the applicant’s and all group member claims: Bright v Femcare Ltd at [18]. It may, in that case, be appropriate to have that issue heard and determined, and following that to discontinue the proceedings under Pt IVA. 15.24 The Full Federal Court has warned against exercising the court’s power under s 33N before at least the utility of the group proceedings regime has been exhausted by resolution of the common issues: Bright v Femcare Ltd at [18] per Lindgren J; at [129] per Kiefel J; at [149] per Finkelstein J. In Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (No 3), Jessup J refused to make an order under s 33N [page 227] even though it was apparent that ‘there remain very substantial areas of factual dispute with respect to questions that go beyond the individual circumstances of the applicant’: at [40]. Timing was also an important consideration for Garling J in Giles v Commonwealth at [120]–[128]. In AS v Minister for Immigration (Ruling No 7) [2017] VSC 137, Forrest J held that (at [67]): … there is no prescribed time at which an application under s 33N should be made. The authorities, in general, demonstrate that such a determination should not be made until there is a full understanding of the representative plaintiff’s case and how it relates to both the common questions and the interests of the group members. It follows that such a determination may be made after the pleadings have closed, or once outlines of evidence have been exchanged (if that be ordered) or, for that matter, during or at the conclusion of the trial. What is important is that the Court is in a position to assess the requirements of s 33N(1) including, of course, that of it being in the interests of justice to terminate the representative proceeding.

At some later point in the proceedings, a ‘problematic interface’ may arise between issues already determined by the applicant’s claim (as representative for other group members), and issues which relate to each group member’s separate claim, but such complexities should not necessarily persuade the court that it is not in the interests of justice for a proceeding to continue as a representative proceeding at an earlier point in time: Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (No 3) at [50]; see also Guglielmin v Trescowthick (No 2) at [78].

Additional New South Wales and Queensland Provisions 15.25 An additional provision exists under the s 33N equivalent in both the New South Wales and Queensland jurisdictions. This additional provision was introduced into the New South Wales legislation, s 166(2), in 2010, and was subsequently included in Pt 13A of the Civil Proceedings Acts 2011 (Qld), s 103K(2), when it was enacted in 2016. The provision gives further guidance to the meaning of ‘otherwise inappropriate’ for the purposes of the section. It provides that it is not inappropriate for claims to be pursued in a representative proceeding merely because the group members: (a) do not include all persons on whose behalf those proceedings might have been brought, or (b) are aggregated together for a particular purpose such as a litigation funding arrangement. The additional provision is designed to reflect the view taken by the Full Court of the Federal Court in Multiplex Funds Management Ltd v Dawson Nominees Pty Ltd [2007] FCAFC 200 that bringing a representative proceeding on behalf of some but not all group members did not enliven the power to discontinue a representative proceeding. [page 228]

The Explanatory Note to the Courts and Crimes Legislation Further Amendment Bill 2010, which introduced Pt 10 into the Civil Procedure Act 2005 (NSW) states, relevantly: Proposed section 166(1) enables the Supreme Court to order that proceedings in the Court no longer continue under the proposed Part in certain circumstances if it considers it is in the interests of justice to do so. The circumstances are if: (a) the costs that would be incurred if the proceedings were to continue as representative proceedings are likely to exceed the costs that would be incurred if each group member conducted separate proceedings, or (b) all the relief sought can be obtained by means of proceedings other than representative proceedings under the proposed Part, or (c) a representative party is not able to adequately represent the interests of the group members, or (d) the representative proceedings will not provide an efficient and effective means of dealing with the claims of group members, or (e) it is otherwise inappropriate that the claims be pursued by means of representative proceedings. Proposed section 166(2) makes it clear that it is not inappropriate for representative proceedings to be brought on behalf of a limited group of identified individuals. This is consistent with the view taken by the Full Court of the Federal Court in relation to the operation of Part IVA of the Federal Court of Australia Act 1976 of the Commonwealth in Multiplex Funds Management Limited v Dawson Nominees Pty Limited [2007] FCAFC 200.

15.26 This additional provision is only directed to s 166(1)(e) and s 103K(1)(e), the ‘otherwise inappropriate’ head. It does not affect the other situations in which discontinuance may be in the interests of justice, in particular s 166(1)(c) and s 103K(1)(c), the ‘efficient and effective’ head. An example of where s 166(1)(c) and s 103K(1)(c) may be enlivened in relation to a group definition that encompasses only some of the group members is provided by Jameson v Professional Investment Services Pty Ltd (2009) 72 NSWLR 281; [2009] NSWCA 28. In Jameson, the Court of Appeal was addressing the now repealed r 7.4 of the Uniform Civil Procedure Rules 2005 (NSW). Spigelman CJ recognised that the group definition may be relevant to the exercise of discretion under r 7.4(2) which allows the court to ‘otherwise order’ and thus discontinue the proceeding: at [120]. There may be circumstances when a traditional opt-out or ‘open’ group definition is preferable to a ‘closed’ group definition and consequently r 7.4(2) is enlivened (at [105]); for example, when proceedings are instituted

before the relevant parties, or at least the full range of those parties, have been contacted with a view to participating in any proceeding: at [122]. In those circumstances, the ‘closed’ group definition may exclude putative group members from being able to access the courts. [page 229] The New South Wales and Queensland provisions also include an additional ground of terminating the representative proceeding, namely that ‘a representative party is not able to adequately represent the interests of the group members’. The power was previously introduced into Uniform Civil Procedure Rules 2005 (NSW) r 7.4(4D)(e) by Uniform Civil Procedure Rules (Amendment No 20) 2009 (NSW) before being repealed with the introduction of Civil Procedure Act 2005 (NSW) Pt 10. Inadequacy of representation is discussed further in Chapter 20 (s 33T). Given the general power of the court to bring a proceeding to an end where it is ‘otherwise inappropriate’ that the claims be pursued by way of representative proceeding, that ground could be relied upon in a s 33N application in the federal and Victorian jurisdictions.

Reinstatement of a Representative Proceeding 15.27 Representative proceedings that are discontinued pursuant to Federal Court of Australia Act 1976 (Cth) (Federal Court Act) s 33N can be reconstituted as representative proceedings through the Federal Court setting aside the interlocutory orders. In Meaden v Bell Potter Securities Ltd (No 2), Edmonds J ordered that the proceeding no longer continue as a representative proceeding. An application for leave to appeal the order was refused by Emmett J in Meaden v Bell Potter Securities Ltd (No 3) [2012] FCA 739, who stated at the conclusion of his reasons (at [15]): It will always be open to the applicant, or to another claimant, to seek to have the proceedings reconstituted as a proceeding under Part IVA after the criticisms that have been made of the statement of claim and the present constitution of the proceeding have been addressed.

In Meaden v Bell Potter Securities Ltd (No 6) [2013] FCA 1176, an application was made to vacate Edmonds J’s original orders. Edmonds J found that Federal Court Rules 2011 (Cth) r 39.05(c), which allows for an interlocutory judgment or order to be set aside, provided sufficient power for the court to set aside or vacate the s 33N order. However, setting aside the order is a matter of discretion. The court’s reasoning suggests that the discretion should not be exercised unless there has been some change to the nature of the proceedings so that the earlier reasoning which supported discontinuance was no longer valid.

• CASE LAW • 15.28

Bright v Femcare Ltd (2002) 195 ALR 574; [2002] FCAFC 243 (Lindgren, Kiefel and Finkelstein JJ)

Representative proceedings were commenced by the applicant on behalf of two groups of women who had each undergone a failed sterilisation procedure, resulting in pregnancy in the case of women in the first group. [page 230] At first instance, Stone J ordered that the proceeding no longer continue as a representative proceeding: see Bright v Femcare Ltd (2001) 188 ALR 633. The decision was appealed to the Full Federal Court, which overturned Stone J’s judgment, finding that her Honour had merged the inquiries under ss 33C(1)(c) and 33N(1)(c). Importantly, as Kiefel J noted (at [133]): … s 33C(1)(c) is concerned with questions arising from the applicant’s pleading. Section 33N(1)(c) is concerned with the disposition of these questions and their effect.

15.29 In reaching its decision, the Full Federal Court cautioned against exercising the court’s power under s 33N before at least the utility of the group proceedings regime had been exhausted by resolution of the common

issues: at [18] per Lindgren J; at [129] per Kiefel J; at [149] per Finkelstein J. As Lindgren J stated (at [18]): The applications under s 33N were made at a procedurally early stage. Defences have not yet been filed. In substance, the applicant commenced a representative proceeding which ex hypothesi, the legislature intended she be entitled to commence because of the presence of substantial common issues of law and fact, yet the court was immediately asked to accept that the proceeding would not provide an efficient and effective means of dealing with the claim of the group members. I do not mean to suggest that an application under s 33N at such an early stage of a properly commenced representative proceeding would always be premature: if there were an incompatibility or conflict between the representative party’s case and the cases of the represented parties (cf Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 464; 118 ALR 510) or if the only substantial common issue were one of law on which a decision in the case of one group member would bind the others, it may be thought not efficient or effective for the representative proceeding to continue. But ordinarily one would expect that, in an attempt to give effect to the legislative intention, a means will be sought, by case management techniques, to enable a representative proceeding to continue to the stage of resolution of the substantial common issues on the basis that after that stage is completed, an order under s 33N or directions under s 33Q will be made: cf the order made by French J in Zhang De Yong v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 at 403, 404; 118 ALR 165, and the course followed by Stone J in Vasram v AMP Life Ltd [2000] FCA 1676; BC200007043 at [18].

Lindgren J observed that the grounds under s 33N which may lead the court to order a discontinuation of representative proceedings ‘raise practical questions which require that the Pt IVA proceeding be compared with other proceedings that are available to the applicant and group members as a means of resolving their claims’: at [74]. That requires evidence to be adduced which is directed at establishing ‘in some detail the likely course and cost of the two kinds of proceeding required to be compared’: at [76]. Consideration under s 33N should ‘involve an [page 231] assessment of the findings which might be made in an applicant’s case and of the extent to which they would be likely to resolve the other claims’: at [128] per Kiefel J. However, the quantity of common questions which might be answered for the group members need not necessarily be determinative of that question: at [128], [136] per Kiefel J; at [153] per Finkelstein J.

15.30

Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; 244 ALR 600; [2007] FCAFC 200 (French, Lindgren and Jacobson JJ)

P Dawson Nominees Pty Ltd (Dawson) commenced representative proceedings against Multiplex Ltd and a related company, Multiplex Funds Management Ltd. The proceedings stemmed from substantial delay and cost over-runs in the construction of the Wembley Stadium by a subsidiary of Multiplex. The difficulties in construction were alleged to have affected the reliability of estimated profits for the 2005 and 2006 financial year. Dawson alleged, on behalf of itself and group members, that the respondents breached their continuous disclosure duties under the Corporations Act 2001 (Cth). The class represented by Dawson were defined by criteria which included that all members were required to enter into a litigation funding agreement at the commencement of proceedings. At first instance, the respondents sought an order under s 33N(1) that the proceeding no longer continue as a representative proceeding, on the basis that the definition of the class was inconsistent with the terms and policy of Pt IVA. Finkelstein J refused to make that order. The Full Federal Court dismissed the appeal, having regard to each of the grounds under s 33N(1). The court observed that, in making a determination under s 33N(1), it is not for the court to have regard to policy considerations that are not otherwise found in the language or structure of Pt IVA: at [1] per French J; at [118]–[122] per Jacobson J. 15.31 In deciding whether it is ‘otherwise inappropriate’ for the proceeding to continue as a representative proceeding under s 33N(1)(d), the court may look to the purpose served by a continuation of the proceeding: at [192] per Jacobson J. This extends to the way in which the group is defined, even if it is defined in a way that satisfies the threshold of s 33C: at [103], [107] per Jacobson J. It does not, however, change the inquiry

under s 33N to one of whether it is ‘appropriate’ for the proceedings to continue as a representative proceeding. In considering what comparison with a hypothetical comparator proceeding ought to be made, Lindgren J observed (at [13]): Paragraphs (a) and (b) of s 33N(1) expressly call for a comparison between the particular Pt IVA proceeding and a non-Pt IVA proceeding. Paragraph (c) invites but does not compel a comparison between the particular Pt IVA

[page 232] proceeding and any other proceeding, including any under Pt IVA, by which the claims may be pursued. Paragraph (d) does not require, although it does not prohibit, a comparison between the particular Pt IVA proceeding and non-Pt IVA proceedings by which the claims may be pursued. Paragraph (d) does not, however, permit a comparison between the particular Pt IVA proceeding and some other hypothetical proceeding under Pt IVA.

On the same issue, Jacobson J found (at [128]–[129]): … s 33N(1) envisages that the Court will engage in a comparison between how the factors specified in grounds (a) to (d) apply to the existing representative proceeding and how they would apply to a hypothetical non-representative proceeding. This is explicit in grounds (a) and (b). It is implicit in grounds (c) and (d). But it does not follow that the weighing exercise involved, in particular, in grounds (c) and (d), will always entail detailed evidence of the likely course or form, of the comparator proceeding …

15.32

TMAC v Thomas Ford [2010] FCA 445 (Cowdroy J)

Thomas Ford Trading Pty Ltd trading as Fresh Telecoms offered a package by which communications services were supplied with accompanying necessary equipment. Fresh Telecoms forwarded a rental application from the customer to Technology Leasing (via a finance broker). If the rental application was approved, Fresh Telecoms sold the equipment to Technology Leasing, who rented it to the prospective customer. Fresh Telecoms undertook to provide communications services to that customer (using this equipment), but then ceased to provide those communication services: at [4].

Technology Leasing instituted over 40 separate claims in the Local and District Courts for breach of contract arising from unpaid rental payments by each defendant as lessee or as guarantor of such agreement. Each of those proceedings was defended, with cross claims filed against Technology Leasing. The defendants to those proceedings also commenced a representative proceeding in the Federal Court, including against Technology Leasing. That proceeding arose from allegations of misrepresentation under the Trade Practices Act 1974 (Cth): at [4]–[9]. Technology Leasing sought orders by which it hoped to ‘simplify the litigation’, including to discontinue the Federal Court action as a representative proceeding under s 33N: at [1]–[2]. 15.33 The respondent argued that each party would have to establish separate representations and that there was no ‘common thread’ linking the representations: at [12]. The court found the case was analogous to Pampered Paws Connection [page 233] Pty Ltd v Pets Paradise Franchise (Qld) Ltd (No 6) [2010] FCA 295, in that ‘although the claims of each group member were not identical … there was [an] “extensive range of common issues”’: at [28]. Further, Cowdroy J observed (at [29]–[30]): The Court is satisfied that it has the requisite power to ensure that these proceedings are dealt with efficiently even though it may be necessary to hear separate evidence in relation to the individual claims concerning the circumstances in which the representations were made and the damages applicable to each individual. The Court is required to ensure that justice is administered efficiently and in the most cost effective manner. The most substantial claim by Technology Leasing in the Local Court is that against TMAC for a total sum of $61,580.15. The claim against Valentina is $15,701.89 and the claim against Divvie is $8,439.00. If this is broadly representative of the amounts claimed in the other lower court proceedings, it is clearly cost inefficient for those claims to all be heard separately if the claims have a common substratum. The Court is satisfied that the conduct of separate proceedings is not the appropriate course in the interests of all the parties and that management of the Federal Court proceedings under Part IVA is preferable to each defendant having to face separate proceedings.

15.34

Meaden v Bell Potter Securities Ltd (No 2) (2012) 291 ALR 482; [2012] FCA 418 (Edmonds J) Meaden v Bell Potter Securities Ltd (No 6) [2013] FCA 1176 (Edmonds J)

The applicant, Ms Jillian Meaden, brought proceedings against the respondent, Bell Potter Securities Limited, on her own behalf and on behalf of group members, alleging that Bell Potter engaged in conduct contravening the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth), and that it breached fiduciary obligations in connection with broking activities concerning a company called Progen Pharmaceuticals Limited. Bell Potter applied to the court for an order under s 33N that the proceedings no longer continue as a representative proceeding, relying principally on ss 33N(1)(c) and 33N(1)(d): at [8]. Having had detailed regard to the pleading and the claims of the applicant and the types of claims which she purported to represent, Edmonds J found that, even after a trial of Ms Meaden’s case, there would be a ‘necessity for individual appearances by all remaining group members’, since determination of her claim would ‘offer no real guide’ as to the balance of the group members’ claims: at [65], [69]. Thus, allowing the proceeding to continue as a representative proceeding would only lead to difficulty and delay: at [70]. [page 234] An application for leave to appeal was refused: Meaden v Bell Potter Securities Ltd (No 3) [2012] FCA 739. In giving his reasons for that decision, Emmett J observed (at [15]): It will always be open to the applicant, or to another claimant, to seek to have the proceeding reconstituted as a proceeding under Pt IVA after the criticisms that have been

made of the statement of claim and the present constitution of the proceeding have been addressed.

15.35 Following those decisions, Edmonds J made orders under Federal Court Act s 33P to join a number of persons as applicants to the proceeding, and the matter proceeded as multi-applicant proceedings: Meaden v Bell Potter Securities Ltd (No 6) [2013] FCA 1176 at [4]–[6]. The applicants subsequently sought to have the proceedings reconstituted as a representative proceeding: at [7]. Those new representative proceedings would institute a new representative applicant (Brett Tyack, not Jillian Meaden). Alternatively, the applicants sought the separate determination of specific questions in advance of any other issue in dispute. In short, the applicants argued that, first, there is nothing expressly in Pt IVA which would prevent a ‘conversion’ of the type contemplated: at [14], citing Wong v Silkfield Pty Ltd at [11]. On the contrary, the applicants argued that the discretionary powers of the court are broad enough to support such a construction. 15.36 The issues raised in Meaden v Bell Potter were the same as in Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1999) 95 FCR 302 (see Meaden [2013] FCA 1176 at [21]), where Lindgren J refused to make an order reconstituting proceedings under Federal Court Act Pt IVA. His Honour there considered he did not have the power to make the order requested, observing that: (a) an order under s 33N (unless and until set aside) has the effect that the proceeding can no longer be regarded as being within the definition. An order reinstating representative proceedings would be inconsistent with the order under s 33N; and (b) s 33P contemplates the only relevant ‘consequences of [an] order that [a] proceeding not continue under [Pt IVA], [are] that if the proceeding is to continue at all, it is to continue otherwise than under Pt IVA’: Giraffe World at [219]–[221]. The respondents in Meaden, on the other hand, submitted that the s 33N order made in these proceedings ought not be disturbed, and that reinstating

the proceedings under Pt IVA would be inconsistent with Multiple Funds Management Ltd v P Dawson Nominees Pty Ltd at [142], effectively allowing claimants to ‘opt in’ after commencement of the representative proceedings: at [26]–[27]. In the result, Edmonds J was satisfied he had the power to set aside the earlier order under s 33N; however, he was not prepared to make such an order. Further, his [page 235] Honour was not satisfied he had the power to order that the proceedings continue as representative proceedings under Pt IVA or to reconstitute the proceedings with a new representative applicant who had previously not even been defined as a group member: at [30]–[31], [34].

15.37

Carr v Commins Hendriks Pty Ltd [2016] FCA 1282 (Rares J)

Representative proceedings were commenced by Mr Rodney Carr against his former solicitors, Commins Hendriks Pty Ltd, on the basis of an allegedly unfair and misleading cost agreement, which resulted in excessive legal fees being charged by the respondent. The applicant justified commencing a representative proceeding on the basis that Commins Hendriks likely entered into the same form of cost agreement with thousands of other clients, who could potentially form part of the group being represented. He also submitted that it was in the interests of justice that the proceedings continue in their present form. The court acknowledged that (at 17): It is safe to infer that Commins Hendriks will have entered into cost agreements in reasonably similar form … with many hundreds, if not thousands, of their clients over the years of conducting their practice. Accordingly, if these proceedings remain constituted as representative proceedings under Pt IVA, the size of any group may be large.

However, Rares J ultimately held that, in the interests of justice, these

proceedings should no longer continue in representative form, for the following reasons (at [21]–[27]): First, the costs that would be incurred, if the proceedings were to continue as a representative proceeding, are likely to exceed significantly the costs that would be incurred if each group member conducted a separate proceeding. Moreover, Mr Carr is entitled to have his own costs assessed on a solicitor-client basis, and to have that done at no cost, as are each of those clients of Commins Hendriks who might fall within the asserted group and who have rights to a costs assessment of the kind I have described for work or bills rendered in New South Wales. Secondly, if it be the fact, as on the evidence it appears to be, that the difference between the costs actually paid by Mr Carr and those which might be assessed are in the order of $15,000, the costs of running a representative proceeding involving the highly complex issues that I have described would by far exceed anything that was reasonable. Thirdly, I am not satisfied that there is a sufficient degree of likelihood that a class of the kind vaguely described in the originating application and

[page 236] statements of claim ultimately would be identified so as to give rise to relevant common questions. In my opinion, the nature of the relationship between a solicitor and a client is, in a case like the present, better assessed by reference to the particular situation pertaining between those two individual parties. In this case, Mr Carr’s particular circumstances at the time that each of the two costs agreements was entered into, and the circumstances of the solicitors in acting for him on, among others, a no-win no-fee basis, are all factors to be taken into account in arriving at an overall evaluation of what the particular relationship was at the time each contract was made and what the duties, obligations and rights of each of the parties were when that occurred. Those factors include whether there was any unfairness in the terms of the costs agreements, what, if any disadvantage Mr Carr (or any particular client) may have been under at the time he entered into each costs agreement and any misuse of a fiduciary or other position. Fourthly, all the relief sought by Mr Carr here can be sought in an ordinary inter partes proceeding, of the kind envisaged in s 33P(a) of the Federal Court Act, between him and his former solicitors to the extent that a costs assessment as between solicitor and client is not able to resolve any of the outstanding issues. Fifthly, I am of opinion that a representative proceeding will not provide an efficient and effective means of dealing with the claims of group members. The fact that Mr Carr alone is put forward as a representative party suggests that the facts of his particular situation will not

be sufficiently illustrative of the wide variety of potential factual situations that may affect relations between the solicitors and their other clients, including those in personal injuries actions, where solicitors often undertake work on the basis of no win no fee arrangement, albeit often with uplifts of fees in cases where they are able, ultimately, to charge based on legislation giving such rights. These factors suggest that these proceedings would not be a convenient or appropriate vehicle to determine wider issues than those that arise between Mr Carr and Commins Hendriks.

15.38

AS v Minister for Immigration (Ruling No 7) [2017] VSC 137 (Forrest J)

The applicant, AS, commenced a representative proceeding against two government defendants on the basis of her alleged personal injury that occurred while being detained at the Christmas Island Detention Centre. The respondents had previously applied for an order pursuant to s 33N; however, Kaye J had refused to make the order at such an early stage of the proceeding. The ultimate question before Forrest J in this instance was whether such an order should now be made, having progressed to a far later stage in the proceedings. Forrest J acknowledged that (at [67]): … there is no prescribed time at which an application under s 33N should be made. The authorities, in general, demonstrate that such a determination should not be made until there is a full understanding of the representative

[page 237] plaintiff’s case and how it relates to both the common questions and the interests of the group members. It follows that such a determination may be made after the pleadings have closed, or once outlines of evidence have been exchanged (if that be ordered) or, for that matter, during or at the conclusion of the trial. What is important is that the Court is in a position to assess the requirements of s 33N(1) including, of course, that of it being in the interests of justice to terminate the representative proceeding.

His Honour subsequently held that it was an appropriate time to make such a determination, noting that since the previous decision of Kaye J (at [70]– [71]): The proceeding has progressed since then, in that the pleadings are now settled; the

common issues have been identified by AS; and expert witness reports and most of the outlines of evidence have been filed with the court. At the heart of the dispute between the parties is a fundamental question: whether AS’s claim can resolve any or sufficient issues to have utility as a representative class action. In my opinion, now is the time to determine the issue and formulate precisely the parameters for the trial.

Having established the above, Forrest J proceeded to determine whether such an order should be made in these circumstances. Ultimately, his Honour determined that the representative nature of the proceeding was not an ‘efficient and effective means of dealing with the claims of group members’ due to the following issues. Forrest J determined that the nature of AS’s claim was individual (at [73]): The claim of AS is a traditional, individual personal injuries claim in negligence. It relates solely to her treatment (medically and socially) whilst in detention. In my opinion, the pleaded case does not involve the consideration of a common thread (or any real part of it) which permeates the claims of other group members — rather it focuses on her alleged predicament whilst held in the detention centre, with little or no commonality with the claims of other group members.

And subsequently his Honour noted (at [77]–[78]): The circumstances of the detention of each group member is individual — the only common bond between the group members in relation to a personal injuries claim is their confinement at the Detention Centre. Moreover, and I will return to this in more detail in a moment, it is inevitable that in each group member’s case, individual issues relevant to breach, causation and damages will need to be examined.

Having identified the above, Forrest J further stated that (at [81]): … it is impossible to see how the resolution of the claim of AS would resolve any (or, at absolute best, perhaps a few) of the common questions in their most recent iteration.

[page 238] Beyond AS’s individual claims, Forrest J also noted that (at [97]–[99]): … the one common issue that may have permitted the action to proceed into a trial phase is the question of the existence of a duty of care. This appears to have been the primary point that influenced Garling J to permit the proceeding to continue as a class action in Giles … But here, the point is a relative non-issue. The Commonwealth admits that it owed a non-

delegable duty of care to AS to take reasonable care for her safety whilst in detention. That, it seems to me, is the end of the matter.

In turning to whether the relief sought could be obtained by means of another form of proceeding, Forrest J held that (at [110]): … it is difficult to see how the hypothetical ‘comparator proceedings’ which might be brought individually by a group member would be conducted differently if prosecuted individually. I cannot perceive any true benefit from the determination of the claim of AS under Part 4A.

His Honour subsequently noted that (at [118]–[119]): I see little, if any, prejudice to those group members who are interested in pursuing their individual claims by the termination of the representative aspect of this proceeding (or, to put it another way, I see no real benefit to those group members who may wish to pursue their claims as part of this proceeding). Accordingly, given the nature of the claims of each group member, I can see little, if any, prejudice caused by granting the application under s 33N. I note in particular that there is no question of any prejudice caused by a limitation period, as the Act specifically takes this into account: s 33ZE.

Beyond the issues already identified, Forrest J further noted his concern surrounding the generality and width of the common questions, and evidence provided, within the proceeding. Forrest J feared that this resulted in some risk (at [131]): … that in some way the case will become an overarching inquiry (indeed a Royal Commission) into the conditions at the detention centre generally. I think there is some force in this, given the history of this proceeding and the breadth of the common questions.

On the basis of the above, the defendant’s application was granted, with AS’s claim to continue as an individual proceeding.

[page 239]

CHAPTER 16 Consequences of Proceedings Not Continuing Under This Part: s 33P • OVERVIEW • This provision sets out the consequences of a court ordering that a proceeding no longer continue as a representative proceeding. The consequences are that: the representative proceeding is ‘converted’ to an individual proceeding; and a group member may apply to be joined to the converted proceeding as an applicant.

• LEGISLATION • Section 33P, Federal Court of Australia Act 1976 (Cth) Consequences of order that proceeding not continue under this Part Where the Court makes an order under section 33L, 33M or 33N that a proceeding no longer continue under this Part: (a) the proceeding may be continued as a proceeding by the representative party on his or her own behalf against the respondent; and (b) on the application of a person who was a group member for the purposes of the proceeding, the Court may order that the person

be joined as an applicant in the proceeding.

Section 33P, Supreme Court Act 1986 (Vic) Consequences of proceeding not continuing under this Part If the Court makes an order under section 33L, 33M or 33N that a proceeding no longer continue under this Part— (a) the proceeding may be continued as a proceeding by the plaintiff on the plaintiff’s own behalf against the defendant; and (b) on the application of a person who was a group member, the Court may order that the person be joined as a plaintiff in the proceeding.

[page 240]

Section 167, Civil Procedure Act 2005 (NSW) Effect of discontinuance order under this Part (1) If the Court makes an order under section 164, 165 or 166 that proceedings no longer continue under this Part: (a) the proceedings may be continued as proceedings by the representative party on the party’s own behalf against the defendant, and (b) on the application of a person who was a group member for the purposes of the proceedings, the Court may order that the person be joined as an applicant in the proceedings. (2) In this section: “applicant”, in relation to proceedings, includes a claimant or plaintiff (as the case may be) in the proceedings.

Section 103L, Civil Proceedings Act 2011 (Qld) Effect of discontinuance order under this part If the court makes an order under section 103I, 103J or 103K that a proceeding no longer continue under this part— (a) the proceeding may be continued as a proceeding by the representative party on the party’s own behalf against the defendant; and (b) on the application of a person who was a group member for the proceeding, the court may order that the person be joined as an applicant or plaintiff in the continued proceeding.

• COMMENTARY • Operation of s 33P 16.1 In Courtney v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 at [18], Sackville J summarised the operation of s 33P as follows: The Court has power to order that a proceeding not continue as a representative proceeding in certain circumstances: s 33N. Where such an order is made, the representative party may continue the proceeding on his or her own behalf: s 33P(a). In such circumstances a group member may apply to be joined in the proceeding: s 33P(b).

[page 241] See also McIntyre v Eastern Prosperity Investments Pty Ltd (No 4) [2002] FCA 1133 at [26] per French J; Tongue v Tamworth Council [2005] FCA 124 at [4] per Jacobson J. 16.2 A successful s 33N application in Meaden v Bell Potter Securities Ltd (No 2) (2012) 291 ALR 482 saw that proceeding no longer continue as a representative proceeding pursuant to Federal Court of Australia Act 1976 (Cth) (Federal Court Act) Pt IVA. Edmonds J then ‘made an order joining

43 persons, being group members to which this proceeding related, in addition to Ms Jillian Annetta Meaden, as applicants in this proceeding, and an order joining 25 other persons, including Mr Brett Tyack, as applicants in this proceeding’: Meaden v Bell Potter Securities Ltd (No 6) (2013) 223 FCR 81 at [5]. The proceeding then continued as a multi-applicant proceeding. 16.3 In Carr v Commins Hendriks Pty Ltd [2016] FCA 1282, Rares J held that the proceedings should not continue as a representative proceeding. The claim was commenced by Rodney Carr against his former solicitors, Commins Hendriks Pty Ltd, on the basis of an allegedly unfair and misleading cost agreement, which resulted in excessive legal fees being charged by the respondent firm. Rares J held (at [26]) that the proceedings should not continue as representative proceedings for a number of reasons, including that ‘all the relief sought by Mr Carr here can be sought in an ordinary inter partes proceeding, of the kind envisaged in s 33P(a) of the Federal Court Act, between him and his former solicitors to the extent that a costs assessment as between solicitor and client is not able to resolve any of the outstanding issues’. 16.4 In the context of an application pursuant to s 33N (Chapter 15), the Full Federal Court in Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 considered s 33P. Lindgren J observed (at [22]): The passage from the reasons for judgment of Heerey J in P Dawson Nominees Pty Ltd v Multiplex Ltd [2007] FCA 1044 at [32] was that ‘the case [would] proceed in this Court in one form or other, regardless of the outcome of the s 33N application; see s 33P of the Federal Court Act’. Section 33P of the Act, to which Heerey J referred, provides for a Pt IVA proceeding to continue as an ordinary proceeding brought by the applicant for its benefit alone, once an application under s 33N has succeeded.

Jacobson J also stated (at [127]): Section 33N(1) confers power to make an order of discontinuance of the proceeding under Pt IVA. Implicit in this is that the Court will consider whether it is in the interests of justice that the proceeding be determined as a non-representative action, or as a number of such actions. Indeed, s 33P provides for that consequence.

[page 242]

16.5 The Victorian provision was considered in McLean v Nicholson (2002) 172 FLR 90; [2002] VSC 446 at [27]: Section 33P of the Supreme Court Act 1986 provides that if the Court makes an order that the proceeding no longer continue under Part 4A of the Act the proceeding may be continued as a proceeding by the plaintiff on the plaintiff’s own behalf against the defendant. The section further provides that on the application of a person who was a group member the Court may order that the person be joined as a plaintiff in the proceedings. In the circumstances, to enable the effective disposition of this case and having regard to the small number of group members involved, it is appropriate that there be orders facilitating those persons’ joinder in this proceeding as plaintiffs if they wish to do so. …

16.6 Section 33P recognises that group members are technically not a ‘party’ to the proceedings, which is why a group member is provided the express right to be joined as a party in the subsequent proceedings. In Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14, the respondents argued that group members are not persons who institute or bring a proceeding under Pt IVA, referring to s 33P, amongst other provisions, to support the contention. Griffiths J rejected the argument, stating (at [65]) that ‘the respondent’s reliance upon [s 33P] is misconceived because to it has elided the concept of a person bringing an action with the concept of a person being a “party” to the proceeding’.

Group Members Being Joined and Costs 16.7 In Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes [2016] VSCA 128, the Court of Appeal referred to the ‘express right’ that the group member has to apply to the court for an order that the group member be joined as a plaintiff in the proceeding if the court makes an order that a proceeding not continue as a group proceeding: at [127]. 16.8 Group members are protected from an adverse costs order pursuant to Federal Court Act s 43(1A). Group members who continue personal actions pursuant to s 33P lose the immunity from costs orders provided by s 43(1A) as the provision is only applicable to a representative proceeding. In McIntyre v Eastern Prosperity Investments Pty Ltd (No 4) at [26], French J explained:

I have given consideration to the possibility of making an order under s 33N of the Federal Court of Australia Act 1976 (Cth), that the proceeding no longer continue as a representative proceeding under Part IVA. This would have the consequence that Group Members could then apply to be joined as applicants which would, of course, expose them to the possibility of liability for costs in the event that the application was unsuccessful. If Group Members

[page 243] were joined as applicants pursuant to s 33P of the Act it seems likely that this would leave them, for all practical purposes, in much the same position as they are now save for their potential liability under any further costs orders that might be made. The difficulty is that if the action is dismissed and individual Group Members wish to pursue their own proceedings as applicants they may be out of time in respect of certain of the causes of action.

Group Members not Joined and Statutes of Limitations 16.9 The commencement of a representative proceeding results in the running of any limitation period that applies to the claim of a group member to which the proceeding relates being suspended: Federal Court Act s 33ZE. The operation of s 33ZE is discussed in Chapter 31.

• CASE LAW • 16.10

Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229 (Spender, Hill and Sackville JJ)

The Full Court of the Federal Court, in allowing an appeal, ordered that the proceeding no longer continue under Pt IVA. However, the court allowed the proceeding to be continued by each applicant by order made pursuant to s 33P. Spender J observed (at [10]): Having regard to the numerous opportunities that the applicants have had to plead a representative case, and the formidable difficulties that attend any attempt to plead the case foreshadowed by the applicants as that which they wish to make, I would order that the present proceedings not continue as representative proceedings. Each of the applicants

should be permitted the opportunity to replead: s 33P of the Act. Some of the applicants have died since the filing of the application and I think it right that the actions of all six applicants be permitted to continue (if that is possible), although not as representative proceedings.

See also Hill J at [15]. Sackville J would have granted leave to re-plead: at [182]. The Full Court made the following orders relevant to s 33P (at ALR 527–8): (a) The Court declares that it is inappropriate that the claims of the applicants in the principal proceeding be pursued by means of a representative proceeding. (b) That the proceedings no longer continue under Part IVA of the Federal Court of Australia Act.

[page 244] (c) That each applicant in the principal proceeding presently a party to the representative proceeding file and serve on or before a date to be fixed with the legal representatives of the parties an application and statement of claim relating to that applicant’s claim against the respondents in the principal proceeding or any of them.

16.11

McLean v Nicholson (2002) 172 FLR 90; [2002] VSC 446 (Bongiorno J)

The plaintiff, by her litigation guardian, her mother, commenced a group proceeding under Supreme Court Act 1986 (Vic) Pt 4A on behalf of herself and as a representative of nine other persons who were allegedly injured as a result of their being poisoned by eating Spanish Mackerel at Hervey Bay, Queensland, on 8 January 2001. An application was made for an order under s 33N that the proceeding not continue under Pt 4A. The court observed that ‘the situation contemplated by s. 33N(1)(b) of the Act clearly exists in this case’ as all of the allegedly injured persons could be joined as plaintiffs in the one proceeding: at [12]. Consequently, an order that the proceeding no longer continue as a group proceeding was made. The court, relying on s 33P, also ordered that individual group members

be given notice of the orders made by the court and that each group member have leave to join as a plaintiff in the proceeding, provided that on or before 8 November 2002: (a) he or she consents in writing to being so joined; and (b) he or she agrees to retain Messrs Slater and Gordon as his or her solicitor in the proceeding.

[page 245]

CHAPTER 17 Not All Issues Common: s 33Q • OVERVIEW • This provision arms the court with case management powers for dealing with non-common issues. The court has power to: give directions to deal with the non-common issues; create sub-groups; and appoint a sub-group representative party. Although specific reference is made to sub-groups, the provision does not limit the court to this course of action for addressing non-common issues. The provision also provides an alternative to discontinuance under s 33N but close attention needs to be given to whether discontinuance, or some other form of case management, is the most efficient approach to be taken to managing the proceedings.

• LEGISLATION • Section 33Q, Federal Court of Australia Act 1976 (Cth) Determination of issues where not all issues are common (1) If it appears to the Court that determination of the issue or issues common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining issues. (2) In the case of issues common to the claims of some only of the group

members, the directions given by the Court may include directions establishing a sub-group consisting of those group members and appointing a person to be the sub-group representative party on behalf of the sub-group members. (3) Where the Court appoints a person other than the representative party to be a sub-group representative party, that person, and not the representative party, is liable for costs associated with the determination of the issue or issues common to the sub-group members.

[page 246]

Section 33Q, Supreme Court Act 1986 (Vic) Where not all questions common (1) If it appears to the Court that determination of the question or questions common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining questions. (2) In the case of questions common to the claims of some only of the group members, the directions given by the Court may include directions establishing a sub-group consisting of those group members and appointing a person who consents to the appointment to be the sub-group representative party on behalf of the sub-group members. (3) If the Court appoints a person other than the plaintiff to be a subgroup representative party, that person, and not the plaintiff, is liable for costs associated with the determination of the question or questions common to the sub-group members.

Section 168, Civil Procedure Act 2005 (NSW) Determination of questions where not all common

(1) If it appears to the Court that determination of the question or questions common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining questions. (2) In the case of questions common to the claims of some only of the group members, the directions given by the Court may include directions establishing a sub-group consisting of those group members and appointing a person to be the sub-group representative party on behalf of the sub-group members.

Section 103M, Civil Proceedings Act 2011 (Qld) Where not all issues are common (1) If it appears to the court that deciding the issue or issues common to all group members will not finally decide the claims of all group members, the court may give directions in relation to deciding the remaining issues. (2) If an issue is common to the claims of some only of the group members, the directions given by the court may include directions— (a) establishing a sub-group consisting of those group members; and [page 247] (b) appointing a person to be the sub-group representative party for the sub-group members. (3) If the court appoints a person other than the representative party to be a sub-group representative party, that person, and not the representative party, is liable for costs associated with deciding the issue or issues common to the sub-group members.

• COMMENTARY •

Case Management Approaches 17.1 Although representative proceedings are premised on the existence of common issues, very few cases will be entirely common as between the group members. It will be usual that representative proceedings will give rise to issues that are not common, including issues that are shared by only some group members or issues that are individualised. This follows from the requirements in s 33C(1)(b) (‘the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances’) and (c) (‘the claims of all those persons give rise to a substantial common issue of law or fact’). 17.2 Section 33Q is not limited to the use of sub-groups in addressing non-common issues. In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2001] VSC 372 at [37], Gillard J stated: [s 33Q] gives a wide power to the Court to give directions in relation to questions. In my view, the wide power given in sub-s 1 is not made subject to sub-s 2. Sub-section (2) merely indicates that the Court may, if it so desires, include directions establishing a sub-group. But that does not seem to me to qualify or read down the wide power given to the Court to decide other questions, which will not finally determine the claims of all group members.

In Milfull v Terranora Lakes Country Club Ltd [2002] FCA 178 at [23], Kiefel J explained: Section 33Q provides for the situation where the determination of the issue common to all group members will not finally determine the claims of all group members. It provides that the Court may give directions as to these outstanding or additional claims. Subsection 33Q(2) then provides: In the case of issues common to the claims of some only of the group members, the directions given by the Court may include directions establishing a subgroup consisting of those group members and appointing a person to be the subgroup representative party on behalf of the sub-group members.

[page 248] However, while s 33Q (and s 33R) provides a mechanism by which individual issues can be determined, a group member is not obliged to use the

provision to raise non-common issues: see Timbercorp Finance Pty Ltd v Collins and Tomes [2016] VSCA 128 (1 June 2016) at [13] and the discussion in the High Court in Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 91 ALJR 37. The provision is permissive, rather than coercive: Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 at [225]; Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469 at [35]. Examples of how sub-groups may be used to case manage non-common issues is discussed below in relation to McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1 and Wingecarribee Shire Council v Lehman Brothers Australia Ltd (No 3) (2012) 301 ALR 1. 17.3 An alternative approach is that once the courts have determined the common issues they then discontinue the proceedings as representative/group proceedings rather than proceed under s 33Q: Zhang De Yong v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384 at 403, 404; [1993] FCA 489; Vasram v AMP Life Ltd [2000] FCA 1676 at [18]; Vasram v AMP Life Ltd [2000] FCA 1916 at [21]; Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 11) [2013] FCA 241 at [67]. Lindgren J in Bright v Femcare Ltd (2002) 195 ALR 574; [2002] FCAFC 243 at [18], commented: [O]rdinarily one would expect that, in an attempt to give effect to the legislative intention, a means will be sought, by case management techniques, to enable a representative proceeding to continue to the stage of resolution of the substantial common issues on the basis that after that stage is completed, an order under s 33N or directions under s 33Q will be made …

In Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 11), Mansfield J made an order under s 33N for the proceeding to be discontinued as a representative proceeding and stood the proceeding over for a period of three months to enable any group member to apply to be joined as an applicant to the proceeding. Any such application was to be supported by the proposed statement of claim of that group member: at [67]. Alternatively, the court noted that a group member could commence their own proceedings in the court: at [68].

Sample Group Members — An Alternative Case Management Approach

17.4 As an alternative to sub-groups, a practice has developed in some cases of appointing ‘sample group members’ to provide a vehicle to determine issues which are common to a subset of group members. The concept of ‘sample group members’ does not exist in the legislation. When sample group members are appointed, the court relies on its general power conferred by s 33ZF (Chapter 32). [page 249] 17.5 Importantly, as there is no sub-group representative party appointed, there is no subsequent liability for costs should the claim fail: see Matthews v SPI Electricity Pty Ltd (Ruling No 5) (2012) 35 VR 615 at [39], [50] per Forrest J. 17.6 ‘Sample group members’ were initially permitted, however not labelled as such, in McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1. A representative proceeding commenced in relation to the manufacture and distribution of agricultural pesticides. In McMullin, Wilcox J determined to hold an initial trial that dealt with liability and subsequently addressed causation and damages. The issues of causation and damages were not common issues. On 24 June 1997, Wilcox J handed down his judgment on liability in relation to the applicants: McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1. His Honour then heard and decided seven group members’ cases in relation to damages: McMullin v ICI Australia Operations Pty Ltd [1997] FCA 1298. Wilcox J subsequently made orders pursuant to s 33Q(2) constituting 16 sub-groups consisting of particular persons who each claimed less than $100,000, and delegating to a judicial registrar of the court power to hear and determine those claims: McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1; 156 ALR 257; [1998] FCA 658. 17.7 Despite these developments, the term ‘sample group members’ was not expressly utilised by the court until Matthews v SPI Electricity Pty Ltd (Ruling No 5) (2012) 35 VR 615. The plaintiff applied to have not only her own claim determined at trial, but also that of a sample of group members in

the proceeding who were not covered by the claims of the representative party, and were also ‘geographically distant’ from the plaintiff’s property. 17.8 Forrest J observed that there was ‘great utility in employing a sample group member device’: at [18]. The court determined that it would not necessarily proceed to determine the entirety of the sample group member claims and sample group members would not be liable for costs: at [33]–[44]. The court noted that it was appropriate to make such an order under s 33ZF, as it was ‘in the interests of justice, in enabling the court at trial to deal with as many issues raised in the claim as is practicable’: at [43]. See also Moore v Scenic Tours Pty Ltd [2015] NSWSC 1777 at [43] per Beech-Jones J. 17.9 However, it should not be assumed that ‘sample group member’ orders will always be made. In the shareholder class action Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469, an application by the respondent for institutional investors to be appointed as sample group members was rejected by the court, on the basis that the proposed orders were not required to ‘ensure that justice is done’, under s 33ZF: at [131]–[132]. Beech-Jones J noted that this legislative provision was ‘not a licence for me to impose my own case management philosophy’, nor was it sufficient that the evidence was ‘convenient or useful’ to the court: at [33]. [page 250] 17.10 Further, in Rodriquez & Sons Pty Ltd v Queensland Bulk Water Supply Authority [2015] NSWSC 1771, Beech-Jones J was hesitant to make such an order without further identification of the relevant group members and their individual claims. He directed the parties to identify potential sample group members, representing various categories of identified loss, prior to him determining whether there should be sub-groups or sample group members established within the proceeding: at [63]–[64].

Sub-groups 17.11

The formal use of sub-groups, as contemplated by the legislation, is

a useful case management tool that enables the court to determine more issues for more group members than would otherwise be the case. Conceptually, they empower the court to create a number of smaller representative proceedings, and determine common issues in those smaller proceedings, within the overarching representative proceeding which determines issues which are common to all group members. In the absence of sub-groups (or the appointment of sample group members), a court would only be able to determine issues which were common to all group members. However, in many cases there may be a question that is sufficiently common to ensure compliance with the threshold criteria of ss 33C and 33H, but within the represented group there may then be a number of questions which are common to only certain segments of the wider group. By forming sub-groups, the court is able to determine those issues as well, rather than the individual group members having to await the determination of those issues in their individual claims. 17.12 The ALRC’s 1988 report, ‘Grouped Proceedings in the Federal Court’, responded to the question, ‘When are sub-groups needed?’ as follows (at [171]): A principal applicant is a person who has commenced grouped proceedings; but the term can extend to other persons who have the conduct of group members’ proceedings. Extra principal applicants may be needed where there are sub-groups which need to be represented separately in the proceedings. Sub-groups are groups of two or more group members who have a particular question in common which is not common to the other group members. An example of a sub-group issue can be in the Federal Court case of Milner v Delita Pty Ltd [[1985] 9 FCR 299. This case was not a representative action but its facts illustrate the concept of sub-groups]. The respondents invited the applicants to invest in a project for growing and processing guava fruit. The Court found that the respondents had contravened s 52 of the Trade Practices Act 1974 (Cth) and that the loss to the applicants might include the cost of borrowing money to invest in the project or the cost of determining an earlier investment and, perhaps, other losses [id, 299]. The applicants were divided into three groups:

[page 251] those who invested in the guava projects by using money specifically borrowed for that purpose and no other money;

those who invested in the guava projects by using money specifically borrowed for that purpose and money derived from other sources; and those who did not borrow at all for the purpose of investing in the guava projects. The respondent submitted that the applicants who fell within the last category, or the middle category so far as non-borrowed money was concerned, could not establish a nexus between the conduct of the respondent in contravening s 52 and the alleged claim for damages by way of interest. Thus, a ‘sub-group issue’ arose, that is, whether those applicants using non-borrowed money were nevertheless entitled to their notional loss of interest. If this case were to occur in grouped proceedings, the Court and the sub-group members would have to consider the appointment of a sub-group as a further principal applicant to argue these issues for other sub-group members. Similarly, consideration would have to be given to allowing sub-group representation in a grouped proceeding alleging discrimination in employment which included the claims of those who were not hired, those who were threatened with retrenchment and those who were actually retrenched. [See Najdovska v Australian Iron and Steel Pty Ltd (1986) EOC 92-176.]

Sub-groups and Costs 17.13 Sub-group members like group members are not liable for costs. However, a sub-group representative party, rather than the representative party, is liable for costs associated with the determination of the issues common to the sub-group members: s 33Q(3). In King v GIO Australia Holdings Ltd [2001] FCA 270 at [9], the Full Federal Court (Sackville, Hely and Stone JJ) set out the position as to costs for a sub-group representative: In considering a group member’s liability for costs it is necessary to bear in mind s 43(1A) of the Act, which provides that in a representative proceeding commenced under Part IVA the Court may not award costs against a group member except as authorised by ss 33Q or 33R. Section 33Q permits the Court, inter alia, to establish a sub-group and appoint a representative party on behalf of sub-group members in order to determine issues not common to all group members. In such a case, the sub-group representative party and not the representative party is liable for costs associated with the determination of the issues common to the sub-group members: s 33Q(3). Section 33R(1) authorises the Court to permit an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to the claims of that member. In that case, the individual group member and not the representative party is liable for the costs associated with determining that issue.

[page 252]

See also Hall v Australian Finance Direct Ltd (No 3) [2007] VSC 366 at [17]; Matthews v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 5) (2012) 35 VR 615 at [3]. 17.14 Civil Procedure Act 2005 (NSW) s 168 contains the same provision as the federal, Victorian and Queensland legislation except that it is silent as to the liability of the sub-group representative for costs. However, the New South Wales Law Reform Commission, ‘Security for costs and associated orders’, Report 137 (December 2012) states (at [3.91]): Sections 168 and 169 deal with situations where issues arise that are not common to the whole group. Under s 168 sub-groups with a representative party may be created. Section 168 gives the court the power to permit an individual group member to appear for the purposes of determining questions that relate only to that group member. In such cases the individual group member or the representative party of the sub-group, is liable for costs associated with determining the questions relevant to the sub-group or party.

Valid Representative/Group Proceeding Required 17.15 The ability of the court to address non-common issues does not remove the need for the proceedings to comply with the requirements for the commencement of a representative proceeding such as ss 33C, 33D and 33H. In Ryan v Great Lakes Council (1997) 78 FCR 309; 149 ALR 45 at 48; [1997] FCA 970, Wilcox J observed: The powers granted by [ss 33Q and 33R] are powers available in a properly-constituted proceeding. They assume the existence of a valid representative proceeding; they do not cure any deficiency of standing that may exist. If the present applicant has no personal claim against a particular respondent, the existing proceeding was not validly commenced as against that respondent. It must be dismissed; no opportunity for subgrouping or the separate hearing of a group member’s claim will arise.

Application of s 33N to a Sub-group 17.16 In Community & Public Sector Union v Crown in Right of Victoria (1999) 90 IR 4; [1999] FCA 743, the applicants filed an amended application which sought to create a sub-group as a part of the representative proceedings. The court made orders establishing the sub-group and appointing a subgroup representative party in accordance with s 33Q. The respondent sought to challenge the sub-group through s 33N on the basis

that it would be an inefficient and ineffective way of dealing with the claims of sub-group members. The applicant submitted that the court was not empowered under s 33N to [page 253] order that a sub-group proceeding no longer continue as a representative proceeding as distinct from an order which related to the entire proceeding. Marshall J agreed with the applicant and adopted its outline of submissions (at [18]–[19]): Jurisdiction [1] The effect of the order sought by the Respondent in paragraph 1 of its Amended Notice of Motion is to discontinue that part of the representative proceeding which relates to the sub-group’s (‘the Union Employee’s’) application for relief. Such an order is beyond the jurisdiction conferred on the Court by s. 33N of the Federal Court of Australia Act (Cth) 1976 (‘the Act’). [2] Section 33N of the Act affords jurisdiction to the Court to make orders that ‘a proceeding no longer continue under this Part’ [emphasis added] on the grounds specified therein. That section does not arm the Court with jurisdiction to make orders that certain parts of representative proceedings no longer continue under Part IVA of the Act. The Union Employees application for relief is a part of the single representative proceeding before the Court. [3] The Amended Application filed by the Applicants identifies the Second Applicant as a representative party of the Employees and as a representative party of the Union Employees. The claims made by the sub-group are part of the Amended Application and do not constitute separate proceedings able to be the subject of an order under s. 33N. [4] Given the location of s. 33N within Part IVA of the Act, the reference to ‘a proceeding’ in that section should be construed within the definitions contained within that Part. Section 33A of the Act defines ‘representative proceeding’ as a proceeding commenced under section 33C. It is such a proceeding which is the subject of s. 33N of the Act. [5] The omission of the word ‘representative’ before the reference to ‘proceeding’ in the opening words of s. 33N(1) does not imply that the reference to ‘proceeding’ should be attributed with the meaning set out in the definitions in s. 4 of the Act. Such a construction ignores the context in which s. 33N appears. Further, the references in the sub-paragraphs of s. 33N(1) to ‘representative proceeding’, confirm that it is a proceeding of this type which is contemplated by the reference to ‘proceeding’ in the opening words of the section. [6] Further, sub-sections 33N(1)(c)–(d) direct the attention of the Court to a consideration

of the ‘claims’ being pursued by the group members. This reference is in contra-distinction to an assessment by the Court of any individual claim which forms part of a representative proceeding i.e.; a part of a representative proceeding.

[page 254]

• CASE LAW • 17.17

McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1; ATPR (Digest) 46-174 (Wilcox J) McMullin v ICI Australia Operations Pty Ltd [1997] FCA 1298 (27 November 1997, unreported) (Wilcox J) McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1; 156 ALR 257; [1998] FCA 658 (Wilcox J)

The applicants carried on business as farmers and graziers. They claimed to have suffered loss as a result of the contamination of their cattle by chlorfluazuron (CFZ) which was contained in an insecticide variously called ‘Helix 40 ULV Insecticide’ and ‘Helix Insecticide’. The insecticide was sprayed on cotton plants and the leftover plant, cotton gin trash, was fed to cattle. The applicants also sought damages on behalf of others affected by chlorfluazuron contamination and, for that purpose, brought their action as a representative proceeding under Federal Court of Australia Act 1976 (Cth) Pt IVA. In their application the applicants described the group members as: graziers who claim loss to value of stock, costs associated with testing and holding stock and loss of profits; agents who claim loss of commission;

abattoirs and meat processors who claim loss of profits and costs of storing carcasses; pasture protection boards who claim loss of income from being unable to use stock routes that have been affected or may be affected by the goods; and operators of feed lots. During the hearing a question arose as to whether the applicants were entitled to represent group members who carried on business in Queensland, especially in relation to those members’ claims against the state of Queensland. In order to resolve any difficulty and without objection from any party, Wilcox J, relying on s 33Q, constituted a sub-group consisting of those group members who conducted a grazing or other relevant business in Queensland. Further, Christopher John Blomfield was appointed as a subgroup representative party, representing the members of that sub-group in the proceeding. 17.18 Wilcox J ultimately found the manufacturer and distributor of the Helix pesticide owed a duty of care in relation to the contamination of cattle by chemical residue in cotton gin trash fed to cattle to the applicants and those group members who fell within the following four categories of claimants: claimants (mainly graziers) whose cattle had become contaminated by CFZ during the claimants’ period of ownership; [page 255] claimants (graziers and others such as abattoir owners) who unwittingly purchased already contaminated cattle; claimants, such as meat processors and exporters, who owned meat that was found to be contaminated and was, therefore, condemned; and claimants, such as feed lot owners, who found that cattle in their possession (but not ownership) were contaminated and thereafter incurred expense in holding them in detention.

The respondents reached agreement with some group members concerning the amount of damages payable to them. However, many other cases remained outstanding. To facilitate negotiations it was requested that rulings be made in a number of cases to address recurring problems or factual situations. Wilcox J heard seven cases that presented a range of factual and legal issues relevant to causation and loss. In a subsequent stage of the proceedings to facilitate the application of the determinations in relation to the sample cases to other group members’ claims, Wilcox J made orders under s 33Q(2) of the Act constituting 16 subgroups consisting of particular persons who each claimed less than $100,000, and delegating to a judicial registrar of the court power to hear and determine those claims.

17.19

Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (2012) 301 ALR 1 (Rares J)

The three applicants, Wingecarribee Shire Council, Parkes Shire Council and the City of Swan (the councils), sought damages against the respondent, Lehman Bros Australia Ltd (in liq), which was called Grange Securities Ltd (Grange) before it was acquired by Lehman Bros Holdings Inc in early March 2007. The three councils claimed that they suffered losses arising out of their acquisition of synthetic collateralised debt obligations and some other complex financial products (collectively SCDOs). Each of the three councils had a different relationship with Grange. These were, in turn, said to be representative of the range of relationships various group members had with Grange. Rares J described the relationships as follows (at [142]–[144]): Each of those relationships had individual characteristics, but, as will become evident, there were common features and products. The parties suggested that the relationships were illustrative, for the purposes of the class action, of the three roles Grange played in dealing with its clients who were members of the class. First, Parkes dealt with Grange as a client over five years buying and selling SCDOs and other financial products on the basis of ad hoc, or individual, transactions. The Councils contended that this was a relationship between client and investment adviser and in which Grange was subject to the fiduciary duties of such an adviser. Grange contended that the relationship was quite different, being one between arm’s length buyers and sellers of financial products in which Grange traded.

[page 256] Secondly, the initial relationship between Swan and Grange was similar for about the first four years, until they entered into an individually managed portfolio (IMP) agreement (the Swan IMP agreement) on 9 February 2007. The Councils and Grange adopted similar positions in respect of Parkes to those about the proper characterisation of the relationship between Swan and Grange in the period before the Swan IMP agreement was made. Grange had power under the terms of the Swan IMP agreement to select securities, including SCDOs, and to purchase or sell them on Swan’s behalf. However, not all of Swan’s investment portfolio was covered by this agreement. Grange did not have control over other substantial holdings of investment products that Swan did not include in its portfolio with Grange. Grange argued that the Swan IMP agreement limited its responsibility for investment advice because it was not, and Swan was, responsible for the allocation and exposure of Swan’s overall investment portfolio. Thirdly, and in contrast, the relationship between Wingecarribee and Grange was always conducted under an individually managed portfolio agreement (the Wingecarribee IMP agreement) dated 15 January 2007. The Wingecarribee IMP agreement had additional provisions that distinguished its terms from those of the Swan IMP agreement. Under this IMP agreement Wingecarribee appointed Grange as its agent to make investment decisions for the Councils’ entire investment portfolio. Thus, although they have many relevant provisions in common, it will be necessary to consider each of these IMP agreements separately.

From the above description it can be seen that the terms of the contractual arrangements between the three sub-groups varied. Further, the allegations based on fiduciary obligations were dependent on the particular factual setting in which Lehman Brothers was advising and/or selling financial products. It was also the case that the Wingecarribee sub-group was governed by New South Wales law and local council investment protocols, while the Swan sub-group was governed by Western Australian law and local council investment protocols. Rares J made orders pursuant to s 33Q that there be three sub-groups with each of the applicants appointed as a representative party for each sub-group and that certain common questions of law and fact set out in the statement of claim be common questions for each of the sub-groups.

17.20

Matthews v SPI Electricity Pty Ltd (Ruling No 5) (2012) 35 VR 615 (Forrest J)

A representative proceeding was commenced against power company SPI Electricity on the basis of ‘inadequate maintenance standards’, following the Kilmore East bushfire on Black Saturday, 7 February 2009. The lead plaintiff sought to have liability and quantum of damages determined for a sample of group members, alongside her own. The plaintiff argued that this was necessary due to the fact that the claims of this sample group were not covered by the claims of the representative plaintiff, who were ‘geographically distant’ [page 257] from the plaintiff’s property. The plaintiff further sought a ruling in regards to any potential costs liability to arise, should the claims of these sample group members subsequently fail. Forrest J acknowledged that (at [4]): In practice, notwithstanding that there may be a commonality in the alleged cause of the harm occasioned to the group members, a trial focusing solely on the representative plaintiff’s claim may not cover the claims of all group members. To address this problem, a practice has developed to permit other group members to give evidence at trial as to relevant facts concerning his or her claim. This evidence then enables the court to make findings and give judgment in relation to those other claims, which enables binding determinations to be made in respect of most, if not all, group members.

Upon considering the nature of the potential claims of the sample group members involved, specifically in regards to ‘questions of duty, breach, damage and causation’, Forrest J held that (at [13]): Determination of the claim of Mrs Matthews, the representative plaintiff, will not cover the field in relation to the potential claims of all members of the class.

Therefore, his Honour stated (at [18]): As both McMullin and Johnson Tiles indicate, there is great utility in employing the sample group member device in this trial. From both the perspective of the claimants and the defendants, the judgment, as far as is practicable, will cover those falling within the various group descriptions. The alternative approach is unpalatable. For instance, it would mean that judgment on Mrs Matthews’ claim would not cover claims brought for economic loss, nor claims in relation to the provision of warnings in particular areas — there may well be other

examples. That would, in all likelihood, result in orders being made under s 33Q and s 33R of the Act (to which I shall return in a moment) with a further trial or trials of the issues common to those claimants.

However, Forrest J also held that any potential assessment should be deferred. Beyond the use of limited evidence regarding damage to establish liability, the trial was held to be confined solely to the determination of liability. This was justified on the basis that (at [27]–[31]): First, the exercise may be fruitless. The claims of some or all of the sample members may fail at the liability stage and the assessment of damages would be rendered unnecessary. Second, permitting five or six sample members to have their damages claims assessed may well lead to an unacceptable lengthening of the trial …

[page 258] Third, it is not just court time that will be extended by a trial of the quantum of the claims of the sample group members … Prolonging the time for handing down the judgment cannot be in anyone’s interest. Fourth, in the scheme of this litigation, the inconvenience to the individual group members is not significant. Finally, I think that splitting questions of liability and quantum (with the exception of Mrs Matthews’ claim) is consistent with the requirements of s 9(1) of the Civil Procedure Act 2010 which require the court in making an order or giving directions to have regard to the efficient conduct of the business of the court and the efficient use of judicial and administrative resources, as well as the timely determination of a civil proceeding.

In regards to whether any order regarding liability for costs of this sample of group members was necessary, Forrest J acknowledged that (at [34]): Those group members contemplating engaging in the process should know, as Mrs Matthews does, whether they have a potential liability for costs. They should not be left in the dark, as SPI proposes. To put it bluntly, Mrs Matthews knows that if her claim fails then she will be at risk of the application of the general rule that costs follow the event, absent special circumstances. Why, I ask rhetorically, should the group members not know whether they are exposed to similar cost consequences?

On this basis, Forrest J proceeded to consider the applicable legislative provisions, as Gillard J had done in Johnson Tiles. He held (at [39]–[40]): As the power under s 33Q(1) is engaged without the need to appoint a ‘subgroup

representative’ under s 33Q(2), there is no liability for costs under s 33Q(3) — it is only applicable where a subgroup representative is appointed. The power to order costs under s 33R is engaged only where the group member is taking part in the proceeding for the purpose of determining ‘a question that relates only to the claim of that member’. That is not the case here. As I have tried to explain, the primary purpose of the sample group members’ claims being determined at trial is to provide the court with an appropriate vehicle for ensuring that as many common questions as possible can be resolved in the course of that hearing. This process will not deal with the totality of their individual claims, but rather ensures that there is sufficient breadth in the judgment so as to capture as many of the claims as is practicable — indeed, the benefit of this process seems to be acknowledged by all parties. I have therefore concluded that there is no basis upon which an order may be made that the sample group members pay costs in the event of a claim failing.

Importantly, this did not affect the lead plaintiff’s potential liability for costs, including those incurred as a result of a failed sample group member claim. Ultimately, the lead plaintiff’s application was granted in part, proceeding with the giving of evidence by sample group members, and excluding the assessment of damages. [page 259]

17.21

Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469 (Beach J)

Earglow Pty Ltd, as trustees for Boorne Super Fund Account and the Boorne Holdings Family Trust, commenced a class action in the Federal Court of Australia against Newcrest Mining Ltd. The class action alleged that in the period 13 August 2012 to 6 June 2013, Newcrest breached its continuous disclosure obligations under Corporations Act 2001 (Cth) s 674 and the prohibition on misleading and deceptive conduct in Corporations Act s 1041H in: failing to disclose to the ASX certain material information known to Newcrest in relation to expected total gold production and expected capital expenditure; and making statements that misled or deceived shareholders about profit

forecasts and performance for the 2012 financial year. The common issues to be determined at the first stage of the trial included: (a) Whether Newcrest made the representations and, if made, whether they were misleading or deceptive or likely to mislead or deceive; (b) Whether the representations were continuing representations; (c) Whether Newcrest had reasonable grounds for making the representations; (d) Newcrest’s knowledge, if any, of the material information throughout the class period; (e) Whether any or all of the material information was generally available in the market; (f) Whether the material information was known to Newcrest and of a kind required to be disclosed during the class period. The respondent, relying on s 33ZF, sought an order for two institutional investors, who were among Newcrest’s top 20 shareholders and had signed litigation funding agreements with Comprehensive Legal Funding LLC, to partake in the first stage of the trial. The respondent argued that this was necessary, noting that the lead applicant in the proceedings only held a very small amount of the respondent’s issued share capital. Almost 85% of issued share capital was instead held by institutional shareholders. Beach J noted that (at [35]): … the Court has the power to order the acceleration of the adjudication of individual claimants’ cases. But the Court should be cautious in doing so outside the contemplated statutory mechanisms of ss 33Q and 33R. Section 33Q is not relevant in the present case. Section 33R is permissive rather than coercive. Section 33ZF(1) can be used coercively, but it has the higher threshold ‘to ensure that justice is done in the proceeding’. Moreover, it cannot be used as a vehicle to rewrite the procedures and constraints expressed in or necessarily

[page 260] implied by other provisions of Pt IVA (see Courtney v Medtel Pty Ltd (2002) 122 FCR 168;

[2002] FCA 957 at [52]).

Newcrest advanced several examples of previous cases where individual group members’ claims have been adjudicated at the first stage trial, including Johnson Tiles Ltd v Esso Australia Pty Ltd & Abir (No 3) [2001] VSC 372; Woodcroft-Brown v Timbercorp Securities Ltd (in liq) (2011) 253 FLR 240; Mathews v SPI Electricity Pty Ltd (Ruling No 5) (2012) 35 VR 615; and Rowe v AusNet Electricity Services (formerly SPI Electricity Pty Ltd) (S CI 2012 04538). Beach J distinguished these examples from the present case, emphasising that unlike the cases advanced, the applicant had not acquiesced to the procedure put forward by Newcrest and had instead pursued a different forensic strategy. Furthermore, Beach J determined that the cases presented were not analogous as they involved significant differences between individual group members in terms of liability, as group members were distinguished from one another on the basis of the different legal duties owed. Beach J also rejected the claim that the lead plaintiff failed to adequately represent group members, noting that (at [72]–[74]): … the data reveals that the vast majority of actual and potential Newcrest shareholders held, or would have been expected to buy, small parcels of Newcrest shares, and were unlikely to have at their disposal the ‘information advantages’ available to an institutional investor. In fact, when one looks at shareholders and claims, the applicant is more representative than any institutional investor … … most, if not all, shareholder class actions in Australia to date have had a retail investor as the representative party with only that individual claim (together with the common issues) being dealt with at the first stage trial, without any apparent impediment to justice being done between the parties.

Having established the above, Beach J acknowledged that the conduct and role of institutional investors was undoubtedly relevant to the common issues within the proceedings; however, it was not necessary to establishing the applicant’s claim or common issues. Regardless, the applicant had chosen to alternatively rely on expert opinion evidence and data, a choice in which Beach J held that (at [43]): … it is not my role to in substance (as distinct from form) compel the applicant directly or indirectly (through the device of accelerating the adjudication of institutional investors’ individual claims) to adduce evidence of the conduct and role of institutional investors. I

can, however, compel the production of documents and information from institutional investors pre-2011 trial if a sufficient basis is made out for showing that the material is required by Newcrest to compile or complete its evidence on the common issues including providing its own experts with necessary factual foundational material.

[page 261] Furthermore, in regards to Newcrest’s contention that this approach would likely facilitate potential settlement after the initial stage judgment, Beach J held (at [121]): I am inclined to accept that whatever the perceived advantages of adjudicating on a range of individual cases to facilitate a post first stage trial mediation process, that they are not sufficient to justify the requested exercise of power under s 33ZF.

Noting that it was deemed not appropriate or necessary to ensure justice would be done, in addition to the fact that there was no substantial prejudice to Newcrest in refusing the orders sought, the application was ultimately dismissed. Beach J held that (at [34]–[35]): Newcrest cannot go so far as to maintain that such orders are necessary for the applicant to make out its individual case or the case on the common issues. Moreover … Newcrest has not established that such orders are appropriate to ensure a proper adjudication thereof and therefore to ensure justice in the proceeding.

17.22

Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 (Murphy J)

Four separate representative proceedings were commenced by investors following the failure of managed investment schemes in forest plantations. The schemes had been managed by the Willmott Forests Group. These proceedings overlapped; however, they weren’t entirely identical. The applicant sought approval under ss 33V and 33ZF of a settlement deed prepared by the parties. Most relevantly to this chapter, this settlement agreement precluded class members from subsequently denying the enforceability of their loan agreements, on any grounds (common or individual). There remained some uncertainty surrounding whether the opt-

out notice in these proceedings had adequately explained this to group members. The settlement parties argued that whether the settlement agreement itself prevented class members from subsequently raising individual claims against these loan agreements was irrelevant, noting that (at [120]–[121]): … if the proceedings continue to judgment and the applicants are unsuccessful (as the respondents contended is likely) class members will be estopped from seeking to challenge the enforceability of the loan agreements in any further proceeding under the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; 36 ALR 3 (Anshun) or the principles of abuse of process … In this regard the settlement parties submitted that class members who did not opt out could and indeed were required to raise any additional or individual causes

[page 262] of action or defences beyond the pleaded case within the class actions, but did not do so. They contended that if a class member considered that the applicants were not pursuing some alternative claim, whether or not that claim is common to all group members or a claim that is individual or unique to the particular group member, there were various options open to him or her to advance that claim. They submitted that class members could and were required to seek: (a) (in respect of an individual or unique claim) directions: i. under s 33Q for the establishment of a subgroup and to appoint another class member as the representative party in relation to those issues; or ii. under s 33R to permit the class member to appear in relation to those issues; (b) (if the issues raised by the alternative claim could not properly or conveniently be dealt with in the proceedings) directions under s 33S for the commencement of separate proceedings (either individual proceedings if the alternative claim related only to the particular class member or another representative proceeding if the alternative claims are common to a number of class members); or (c) orders under s 33T to substitute another class member as the representative party. They argued that no class member in the present proceedings had done so, despite being on notice through the Annexure A and Annexure B Notices.

On the basis of the above, Murphy J was required, in ascertaining whether to approve this settlement proposal, to determine whether class members could have, or were required to, raise any individual or unique claims or defences

within the representative proceeding. He ultimately rejected this, for a number of reasons, including (at [215], [217]): … first, because this construction is likely to lead to a multiplicity of proceedings and it is inconsistent with the general objectives of Pt IVA in the Second Reading Speech which include allowing claimants to group their common claims so as to reduce legal costs and increase efficiency. It is also inconsistent with the aim of protecting defendants from multiple suits and the risk of inconsistent findings: Bright at [152] (Finkelstein J). Second, it is established that the position of class members is ‘essentially passive’ until after resolution of the common issues: P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176 at [31] (Finkelstein J); Thomas v Powercor Australia Ltd (ACN 064 651 109) [2010] VSC 489 at [37]–[39] (Forrest J). This points away from any requirement on class members to identify any individual or unique claims they possess additional to their common claims and to opt out, failing which they will be confronted by an Anshun estoppel in relation to such claims.

[page 263] His Honour considered the operation of ss 33Q, 33R and 33S (at [218]– [229]): Third, the settlement parties’ contention that ss 33Q, 33R or 33S entitled, indeed required, class members to raise any individual or unique claims within the class actions misconstrues those provisions … [Section 33Q] does not, in terms, extend a right to class members to appear to seek orders for the determination of sub-group or individual issues. The scheme of Pt IVA is that the applicant has the conduct of proceedings on behalf of the class members. The applicant’s lawyers owe fiduciary duties to class members who are their clients and they also owe duties to class members who are not their clients. These duties may or may not be fiduciary in nature, but the applicant’s lawyers at least have a duty to act in the class members’ interests: McMullin v ICI Australia Operations Pty Ltd [1997] FCA 1426 (McMullin) (Wilcox J); Courtney (in a representative capacity on behalf of the persons referred to in para 1 of the Fifth Amended Statement of Claim) v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 at [57] (Courtney) (Sackville J); King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 121 FCR 480; 191 ALR 697; [2002] FCA 872 at [24] and [27] (King) (Moore J); Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 at [15] (Bray) (Merkel J). It is noteworthy that rights of appearance by class members in Pt IVA proceedings are limited, and where class members are permitted to appear the Part expressly so provides: eg s 33T, 33R. There are good policy reasons for this. One can readily understand the inefficiency, cost and delay that could occur in large Part IVA proceedings if it was open to

class members to appear to raise their individual issues at times of their own choosing. As Robson J said in Collins and Tomes at [524]: The time, cost, inefficiency and delay of side-tracking the group proceeding to hold case management directions [under ss 33Q, 33R or 33S] for any interested group member on any question arising out of the same, similar or related circumstances might well be contrary to the overarching obligation under the Civil Procedure Act. Robson J cited with approval the finding in Earglow Pty Ltd (ACN 055 664 769) v Newcrest Mining Ltd (ACN 005 683 625) (2015) 230 FCR 469; 324 ALR 316; 106 ACSR 49; [2015] FCA 328 at [141], where Beach J refused to order that the individual claims of two class members be heard in the first stage of that class action, holding that it would not be conducive to resolving the proceeding ‘as quickly, inexpensively and efficiently as possible’ as required by the overarching purpose in s 37M of the Act … I take a similar view. If s 33Q extends a right to class members to appear to seek directions in relation to any individual claims that are not pleaded in the proceedings I would expect that to be clearly set out: Collins and Tomes at [423]. In the absence of plain words I do not construe s 33Q in a way that might seriously reduce the utility of the Pt IVA procedure. In my view the power to give directions under s 33Q is to be exercised on application by an applicant or on the Court’s own motion …

[page 264] [Section 33R] is permissive rather than coercive, which points away from class members being ‘required’ to make an application or risk being precluded from subsequently asserting their individual claims. The power to permit an individual class member to appear is predicated on the Court giving directions under s 33Q, and such directions are to be given on application by a party or on the Court’s own motion, rather than on the application of a class member … [Section 33S] does not, in terms, provide a right of appearance by a class member seeking case management directions. The power is predicated on a decision that an issue cannot properly or conveniently be dealt with under s 33Q or s 33R … [Section 33T] contemplates an application and appearance by a class member, but it is of no relevance in the present cases. There is no evidence that, at the relevant time, there were any grounds upon which any class member may have been able to satisfy the Court that the applicants were not adequately representing the interests of class members. Importantly, even if it is accepted that s 33Q, s 33R, s 33S, s 33T (or 33ZF) entitle class members to seek directions in respect of their individual claims, there is nothing in those provisions to show that unless class members make application under those provisions they are required to do so on pain of losing their rights to assert such claims in subsequent proceedings. If it were intended that class members who did not make such applications

risked losing their rights to rely upon individual claims that were not pleaded I would expect that to be stated in plain terms. I agree with Robson J’s remarks in Collins and Tomes (at [508]–[510]) where his Honour said: If such was the object of the Act, surely the Act would have mandated that group members must raise for directions and possible determination all claims and questions not otherwise covered by the plaintiff’s claims in the group proceeding and all claims and questions not resolved by the determination of the group question or questions common to all group members. As noted above, before the Part 4A regime was introduced, class actions were unlikely to get off the ground if group members’ claims had idiosyncratic dimensions and did not enjoy sufficient commonality. To resolve this Parliament only needed to establish a regime under which class actions could be brought despite idiosyncratic dimensions and individual claims. It would be a much greater step, and indeed a step that was not required to resolve the difficulties facing plaintiffs wishing to bring a group proceeding, to establish a regime under which all idiosyncratic dimensions and individual claims must be raised and determined within the group proceeding. The concern of Part 4A was to ensure that idiosyncratic dimensions and individual claims do not prevent the initiation of a group proceeding. It is one thing for Parliament to acknowledge that the difficulties arising from idiosyncratic dimensions and individual claims should not prevent group proceedings from occurring, but it is another thing entirely for Parliament

[page 265] to say that all individual questions and claims must be brought into the group proceeding. The second proposition would result in group proceedings becoming lengthier and more complex, thereby exacerbating the problems sought to be addressed by the Part 4A regime. The second proposition would also tend to undermine the basic common law right of an individual to have her or his individual legal disputes resolved by a court of law in which the individual is entitled to appear to control the conduct of his or her own case.

Further to the above, Murphy J subsequently stated that he could also (at [238], [240]–[243]): … see nothing in the present cases to show that the asserted ‘failure’ of class members to bring forward their individual claims by making applications under s 33Q, s 33R, or s 33S was unreasonable. … even if it is accepted that class members were able to raise their individual claims or defences within the class actions by applications for orders under s 33Q, s 33R or s 33S, it cannot be said that such applications were clearly open to them. I have found no authority to support the contention that class members were able to make (or had in any previous case made) such an application at that stage and no evidence that M+K or any other lawyer

advised class members to do so. In my view there were real or at least reasonably perceived difficulties in such applications: Gibbs at [28]. … M+K had an obligation to act in the class members’ interests. If applications under s 33Q, s 33R or s 33S were necessary then M+K was obliged, at least, to inform class members of their rights in that regard. M+K did not inform class members that they were entitled to make an application under those provisions, let alone advise them that they were required to apply for such orders if they were to avoid being precluded in subsequent loan enforcement proceedings from relying on their individual claims or defences. … (assuming that class members had raised their individual claims under s 33Q, s 33R or 33S), while it is impossible to be definitive it is unlikely that I would have made orders under those provisions at that point. Such orders are would have been likely to have side-tracked the proceeding and to have led to delay and inefficiency in resolving the proceedings, contrary to s 37M of the Act. I am likely to have seen it is inefficient to identify individual issues at that stage because, if the proceedings were successful on the common claims there would have been no need for class members to agitate their individual claims. If the proceedings were unsuccessful on the common claims the individual claims could be dealt with then. There is no prejudice for the respondents in the asserted failure of class members to make such applications. … the respondents’ submission that class members should have applied for an order under s 33T to substitute a class member as the representative party has no merit. The Court may make such an order where it is satisfied that the applicant ‘is not able adequately to represent the interests of group members’. The settlement parties did not suggest any basis upon which class members might have been able to assert that the applicants were not adequately representing class members’ interests.

[page 266] Noting the above considerations, Murphy J ultimately rejected the claim that class members were required to raise individual or unique claims and defences within the representative proceeding itself. On this basis, it was deemed unfair that the resulting settlement agreement prevented class members from subsequently raising said claims and defences against their loan agreements. Murphy J determined that he would not approve the proposed settlement agreement.

[page 267]

CHAPTER 18 Individual Issues: s 33R • OVERVIEW • This provision is an extension to s 33Q. It provides the court with power to permit an individual group member to appear in proceedings for the purpose of having their individual issues resolved. Where the court gives such a direction, the individual becomes liable for the costs of determining those individual issues.

• LEGISLATION • Section 33R, Federal Court of Australia Act 1976 (Cth) Individual issues (1) In giving directions under section 33Q, the Court may permit an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to the claims of that member. (2) In such a case, the individual group member, and not the representative party, is liable for costs associated with the determination of the issue.

Section 33R, Supreme Court Act 1986 (Vic) Individual questions

(1) In giving directions under section 33Q, the Court may permit an individual group member to take part in the proceeding for the purpose of determining a question that relates only to the claim of that member. (2) In such a case, the individual group member, and not the plaintiff, is liable for costs associated with the determination of the question.

[page 268]

Section 169, Civil Procedure Act 2005 (NSW) Individual questions (1) In giving directions under section 168, the Court may permit an individual group member to appear in the proceedings for the purpose of determining a question that relates only to the claims of that member. (2) In such a case, the individual group member, and not the representative party, is liable for costs associated with the determination of the question.

Section 103N, Civil Proceedings Act (Qld) Individual issues (1) In giving directions under section 103M, the court may allow an individual group member to appear in the proceeding for the purpose of deciding an issue that relates only to the claims of that member. (2) If an individual group member is allowed to appear under subsection (1), the individual group member, and not the representative party, is liable for costs associated with deciding the issue.

• COMMENTARY • Individual Issues 18.1 Although representative proceedings are premised on the existence of common issues, very few claims will be entirely common as between the group members. Claims which meet the threshold criteria in ss 33C and 33H will usually also give rise to issues that are not common and are individualised. This follows from the requirements in s 33C(1)(b) (‘the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances’) and (c) (‘the claims of all those persons give rise to a substantial common issue of law or fact’). The ALRC’s 1988 report, ‘Grouped Proceedings in the Federal Court’, explained how individual issues may arise (at [169]): Although there must always be at least one common question of law or of fact which has to be determined for all group members, there may be issues which must be decided separately in relation to each group member. Examples of such ‘individual needs’ include:

[page 269] the issue of dependence in a death claim brought by relatives whether a misrepresentation induced a person to enter a contract the quantum of damages to which a party is entitled following determination of liability.

18.2 Subsequent experience has shown that individual issues frequently arise where there are separate representations made to group members, in ascertaining causation and in the calculation of damages: Meaden v Bell Potter Securities Ltd (No 2) (2012) 291 ALR 482 at [27] (‘the oral aspects of these representations do not have a high degree of commonality. They depend upon separate conversations, apparently quite different in substance’); Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 6) [2010] FCA 295 at [24] (‘the implied representations … [focus] on the undisputedly individual issues of reliance, causation and loss’); Green v Barzen Pty Ltd (formerly Dukes Financial Services Pty Ltd) [2008] FCA

920 at [17] (‘when one comes to look at inducement and damages, individual issues will arise’). Similarly, product liability claims frequently give rise to individual issues in relation to causation: Peterson v Merck Sharp & Dohme (Aust) Pty Ltd (No 6) [2013] FCA 447. In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212 at [28], Gillard J explained: … where all the elements of a cause of action by a party or group member are not determined as common questions it is necessary for each party and claimant to seek an order for the further hearing of their individual claims.

The ALRC’s 1988 report, ‘Grouped Proceedings in the Federal Court’, set out its view on the case management of non-common issues as follows (at [169]): Where there are individual issues, each group member concerned may have to assume the conduct of his or her own proceeding so that the question can be properly determined. An appropriate notice will have to be given to group members to advise them of the situation. In accordance with the Court’s function of managing the conduct of the proceedings, it should give directions concerning the conduct of individual issues by group members. The court should have considerable flexibility in devising orders about the way in which these individual issues should be conducted. It should have the widest power to make orders, for example, about evidence or procedure. The Court and the parties should devise an appropriate procedure depending on: the complexity of the issue the amount of the claim if monetary relief is involved the number of adjudications which need to be made.

[page 270] 18.3 The interplay between s 33Q and s 33R was considered in Timbercorp Finance Pty Ltd v Collins and Tomes [2016] VSCA 128 (1 June 2016), where the court observed (at [191]): Section 33Q draws a distinction between, on the one hand, ‘the question or questions common to all group members’ and, on the other, ‘the remaining questions’. The words of the section do not contain within them the restriction placed upon them by the primary judge. On the contrary, the phrase ‘remaining questions’ could include not only claims made by the plaintiff other than the common questions but also individual claims made by group

members. The jurisdiction conferred by s 33Q arises if something ‘appears to the Court’. The section does not restrict the circumstances in which something may be caused to ‘appear to the Court’. In this respect, s 33R is telling. It will be noticed that s 33R commences with the phrase ‘[i]n giving directions under section 33Q’. In other words, it contemplates the giving of directions under s 33Q in respect of claims other than those propounded by the plaintiff. First, it operates with respect to ‘a question that relates only to the claim of [a group] member’; ex hypothesi such a claim would not be a claim of the plaintiff. Second, it provides that, when such a direction is given, ‘the individual group member, and not the plaintiff, is liable for costs associated with the determination of the question’. Necessarily, the group member must be present before any such liability for costs could be imposed. The better view is that s 33Q contemplates that the Court will have power to give directions with respect to an unpleaded claim of a group member. Section 33S makes provision for those circumstances where ‘a question cannot properly or conveniently be dealt with under section 33Q or 33R’.

18.4 However, while s 33Q (and s 33R) provides a mechanism by which individual issues can be determined, a group member is not obliged to use the provision to raise non-common issues: see Timbercorp Finance Pty Ltd v Collins and Tomes at [13] and the discussion in the High Court in Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 91 ALJR 37. The provision is permissive, rather than coercive: Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 at [225]; Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469 at [35]. 18.5 In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) at [34], [87], Gillard J accepted that s 33R could be used to resolve the claims of those group members who as a result of the determination of the answers to the common questions had viable claims. Gillard J used s 33R to allow two group members who had given evidence at the trial of common issues to have their claim for damages resolved by a further court hearing. Gillard J facilitated that resolution through making orders for the provision of particulars, discovery and witness statements: at [38]. The resolution of viable claims held by group members who had not given evidence was addressed by the plaintiffs putting forward a number of techniques that could be used in conjunction with s 33R: court hearing, court-ordered mediation and court-appointed referee. To this Gillard J added, if agreed to by the group member and defendant, arbitration: at [79]– [83].

[page 271]

Individual Issues and Costs 18.6 In King v GIO Australia Holdings Ltd [2001] FCA 270 at [9], Moore J set out the position as to costs for an individual who is permitted to have an issue that relates only to their claim determined: In considering a group member’s liability for costs it is necessary to bear in mind s 43(1A) of the Act, which provides that in a representative proceeding commenced under Part IVA the Court may not award costs against a group member except as authorised by ss 33Q or 33R. … Section 33R(1) authorises the Court to permit an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to the claims of that member. In that case, the individual group member and not the representative party is liable for the costs associated with determining that issue.

The New South Wales Law Reform Commission (NSWLRC), ‘Security for costs and associated orders’, Report 137 (December 2012) states (at [3.91]): Sections 168 and 169 deal with situations where issues arise that are not common to the whole group. Under s 168 sub-groups with a representative party may be created. Section 168 gives the court the power to permit an individual group member to appear for the purposes of determining questions that relate only to that group member. In such cases the individual group member or the representative party of the sub-group, is liable for costs associated with determining the questions relevant to the sub-group or party.

Notice of Liability for Costs Under s 33R 18.7 In King v GIO Australia Holdings Ltd [2000] FCA 1869, Moore J dealt with the issue of costs and group members in an opt-out notice. His Honour ultimately determined not to address the issue but observed (at [15]–[16], [18]): If the notice is to say anything about costs then it should outline as simply as possible what the potential liability of a group member is in relation to costs which should probably also involve a discussion about how a group member might be represented if, at a point in the proceedings, proof of individual reliance and loss is necessary. While some of the formulations advanced by the respondents attempt to do this, they are, in my opinion, unnecessarily complicated. It is not unduly difficult to explain simply what the position is for that part of the proceedings in which the applicant seeks to establish that the respondents engaged in

conduct which was negligent, misleading or deceptive or otherwise prove liability in a general sense.However any explanation becomes substantially more complicated in describing what the position would be if the applicant was successful in establishing these matters. It would probably be desirable to describe what would happen, at or following that point, if a group member wished to be represented by a firm other [than] Maurice Blackburn Cashman (whether because the member does not agree to the terms of the fee agreement or otherwise). However it is inappropriate to rehearse whether effective steps

[page 272] could then be taken by such a person to be represented by another firm or anticipate what orders, if any, might be made by the Court which, either directly or indirectly, would permit this to happen (exercising, for example, powers under s 33Q or s 33R). … The fee agreement is a lengthy document which contains many features. The danger in endeavouring to summarise the essence of the fee agreement is that the summary may highlight either attractive or unattractive features (or both). Attempting to create a balanced summary may involve reference to detail that destroys the summary’s utility. I have made several attempts to do so as part of describing the position a group member may be in at a point, if it is ever reached, where individual reliance and loss must be proved. However each attempt has resulted in a summary that is either too complex or fails to deal, in a simple and straightforward way, with the various combinations and permutations that could arise. I have ultimately decided that the notice should not endeavour to explain to a recipient what the consequences are of not opting out other than the important legal consequence of the group member being bound by the judgment. I have, at the conclusion of the approved notice, repeated (and I hope emphasised) the legal significance of the notice and the desirability of a recipient getting advice if that is what the recipient was minded to do.

18.8 In Petrusevski v Bulldogs Rugby League Club Ltd [2003] FCA 1056, the s 33R exception to group members not being liable for costs was raised as a matter that group members should be advised about in the opt-out notice. Sackville J was referred to King v GIO Australia Holdings Ltd, where Moore J had declined to refer to costs in the opt-out notice as it was not possible to do so in a simple and straightforward way. Sackville J took a different approach (at [14]): I think that it is desirable for the opt out notice to refer to s 33R of the Federal Court Act. I appreciate that it is impossible to do so in terms that explain the operation of the fee agreement the applicants’ solicitors propose to use, not least because there was no evidence before me as to the content of the fee agreement. However, I think that a reference can be

made in terms which, although general, are not misleading. In my view, the following formulation is appropriate: If you do not opt out of the proceedings, you will not be liable for any legal costs merely by remaining a Group Member. That, however, is subject to the qualification that the Court has power under s 33ZJ of the Act to order that the costs reasonably incurred by the Applicants in prosecuting the claim on their behalf and on behalf of the Group Members be paid out of any damages awarded to Group Members in the proceedings, to the extent that they may exceed the costs recoverable by the Applicants from the Bulldogs. In addition, if you seek to prove that you suffered individual loss or damage due to the conduct of the Bulldogs, it is necessary to

[page 273] bear in mind s 33R(2) of the Act, which provides that a group member is liable for costs associated with the determination of issues concerned only with that group member as an individual.

Offers of Compromise and Calderbank Letters 18.9 The usual means of managing a costs exposure in litigation is through a Calderbank letter or offer of compromise that puts an opponent at risk of indemnity costs should they not recover damages greater than the settlement offer. See Federal Court Rules O 23, where there is a presumptive entitlement to indemnity costs if the damages recovered is less than the settlement offer; and Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281 at 287–90: a Calderbank offer will result in indemnity costs if in all the circumstances the failure to accept the settlement offer was unreasonable. However, these tools are frequently unhelpful in the class action context as group members may not be known and/or the quantum of the group members’ claims may not be capable of an accurate estimation. 18.10 Leaving to one side the challenges in formulating an offer, a complexity also arises because group members are not ‘parties’ to the proceedings. There would be no difficulty in making a Calderbank offer or

offer of compromise to the lead applicant and the presumption of indemnity costs (at least insofar as the costs associated with defending the lead applicant’s claim) would likely result if the lead applicant did not recover damages greater than the settlement offer. However, if an offer in respect of the entire group was made and not accepted, then group members could not be subject to an indemnity costs order as they are not parties to the proceedings. The court would then need to consider whether to make an indemnity costs order against the lead applicant, even though the offer rejected did not relate to his or her individual claim. Making a genuine compromise in a representative proceeding is therefore difficult. Further, the applicant may rely on it having inadequate information to be able to assess any offer. These obstacles may be removed or lessened after common questions have been decided and individual issues resolved. In Johnson Tiles Pty Ltd v Esso Aust Pty Ltd (No 2) at [37], Gillard J observed: Upon each individual group member being permitted to take part in the proceeding, each claimant, in a sense, becomes a party because of the liability for costs associated with its claim. I encourage the parties to make offers of compromise either under the Rules of Court, see Order 26, or by a Calderbank-type letter. As I have said on prior occasions, in this day and age, no party to litigation should commence the hearing where the claim is for compensation without putting the other party at risk as to costs in respect of the outcome of the litigation. The obligation not only rests on the defendants but also the claimant. Severe costs consequences will flow against a party that chooses to ignore an offer, and recovers less or is obliged to pay more than the offer.

[page 274]

• CASE LAW • 18.11

Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 (Murphy J)

See case note discussion of the operation of ss 33Q, 33R and 33S in Chapter 17.

18.12

Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212 (Gillard J)

The proceedings were commenced by two plaintiffs, on their own behalf and representing the interests of others, seeking compensation from the defendants for damage and losses incurred as a result of the interruption and, ultimately, the cessation of the gas supply, consequent upon an explosion at the gas processing plant controlled and operated by the defendants, on 25 September 1998. The gas supply was restored to customers on or about 6 October 1998. As a result of the lack of gas, customers suffered damage to materials and plant and they and others suffered substantial economic loss. The Supreme Court conducted a trial of the common issues over 38 days. As part of the trial, a number of group members gave evidence. The judgment is Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27. The decision found that the only group members who were entitled to recover were business users of gas who suffered physical damage to property and economic loss resulting from that damage to property. In reaching that conclusion, a number of common questions needed to be answered. The answers to two of the common questions were as follows: 5. Did the first and second plaintiffs and group members suffer loss as a result of the interruption? The court held that the plaintiffs and other group members who gave evidence did not suffer compensable loss but Barrett Burston Malting Co Pty Ltd (Barrett Burston) and Nando’s Australia Pty Ltd (Nando’s) suffered compensable loss arising out of property damage. 6. Did the plaintiffs or any group members who suffered damage, suffer damage as a result of the negligence of the defendants? This raised the question of causation. The court held that the losses suffered by Barrett Burston and Nando’s were caused by the negligence of the defendants. 18.13 To resolve the claims of those group members who had given evidence and were successful at the common question stage, Gillard J made orders pursuant to s 33R(1). The orders were that Barrett Burston and

Nando’s ‘may take part in the proceeding for the purpose of determining those questions which relate to any claim by it for recovery of loss and damage to property and economic loss [page 275] consequent upon the interruption to the gas supply’: at [34]. Gillard J also made orders (at [38]) for: the claimant to file and serve particulars of its claim; the claimant to make discovery of documents relevant to its claim; the defendants to file and serve particulars of their defence to the claim; the filing and delivery of witness statements. 18.14 There were also group members who did not give evidence at the trial of common issues but fell into the category of business users who had suffered property damage or related economic loss. Gillard J recorded that there were approximately 340 insurance claims (at [74]) and 346 registrations with the plaintiffs’ solicitors: at [77]. A regime for dealing with the claims based on their size and a combination of court determination, court-ordered mediation, court-appointed referee, and if agreed to by the group member and defendant, arbitration, were proposed: at [79]–[83]. Gillard J suggested that claims may be able to be settled, including through the use of an offer of compromise or Calderbank letter. Gillard J did not make any directions as a notice was to be issued asking group members who wished to claim to identify themselves. However, for those group members who did come forward, Gillard J accepted that s 33R could be employed to resolve their claims (at [87]): All the parties agreed that the most appropriate course to follow was to leave the plaintiffs as parties to the proceeding and to permit each individual group member who makes a claim hereafter to take part in the proceeding for the purpose of determining his, her or its claim pursuant to s. 33R of the Act. I will follow that procedure unless application is made for good cause to adopt some other procedure.

[page 277]

CHAPTER 19 Directions Relating to Commencement of Further Proceedings: s 33S • OVERVIEW • Section 33S provides the court with further power to case manage noncommon issues where they cannot be dealt with under s 33Q (non-common issues) or s 33R (individual issues). It provides for: the commencement of a separate proceeding by an individual group member; or the commencement of a representative proceeding in relation to the claims of the sub-group. Section 33S allows for new proceedings to be commenced rather than having non-common or individual issues dealt with in a pre-existing representative proceeding. For s 33S to be enlivened, it must be improper or inconvenient to utilise s 33Q or s 33R. The Victorian, New South Wales and Queensland provisions differ from the federal provision in that another proceeding, whether or not a ‘group proceeding’, may be used. The Federal Court provision requires sub-group issues to be determined in another representative proceeding and individual issues to be determined in a non-representative proceeding.

• LEGISLATION •

Section 33S, Federal Court of Australia Act 1976 (Cth) Directions relating to commencement of further proceedings Where an issue cannot properly or conveniently be dealt with under section 33Q or 33R, the Court may: (a) if the issue concerns only the claim of a particular member— give directions relating to the commencement and conduct of a separate proceeding by that member; or (b) if the issue is common to the claims of all members of a subgroup—give directions relating to the commencement and conduct of a representative proceeding in relation to the claims of those members.

[page 278]

Section 33S, Supreme Court Act 1986 (Vic) Directions for further proceedings If a question cannot properly or conveniently be dealt with under section 33Q or 33R, the Court may give directions for the commencement and conduct of another proceeding, whether or not a group proceeding.

Section 170, Civil Procedure Act 2005 (NSW) Directions relating to commencement of further proceedings If a question cannot properly or conveniently be dealt with by the Court under section 168 or 169, the Court may give directions for the commencement and conduct of other proceedings, whether or not group proceedings.

Section 103O, Civil Proceedings Act 2011 (Qld) Directions for further proceedings If an issue can not properly or conveniently be dealt with by the court under section 103M or 103N, the court may give directions for the starting and conduct of other proceedings, whether or not the other proceedings are representative proceedings.

• COMMENTARY • Alternative to ss 33Q and 33R 19.1 Sections 33Q and 33R allow for the management of non-common or individual issues, in the existing representative proceeding. Section 33S allows for non-common or individual issues to be dealt with, but the vehicle is a new or separate proceeding, either in the representative form or as regular proceedings. For s 33S to be enlivened, it must be improper or inconvenient to utilise s 33Q or s 33R: Bright v Femcare Ltd (1999) 166 ALR 743; [1999] FCA 1377 at [9]. The Explanatory Memorandum to the Federal Court of Australia Amendment Act 1991 (Cth) that introduced Pt IVA stated (at [28]): After determining the common issues in a representative proceeding it may not be appropriate, in some cases, to deal with remaining issues in the same proceeding. An example would be a case where, after a determination of liability is made, there are remaining issues in relation to one or more group members which are complex and diverse. In such cases it may be more efficient

[page 279] for separate proceedings, limited to those remaining issues, to be brought either by individual group members or as a separate representative proceeding. This section enables the Court to give directions relating to the commencement and conduct of such an individual proceeding or representative proceeding.

The Explanatory Memorandum suggests that one example of where s 33S

should be used instead of s 33Q or s 33R is where the remaining issues in a subset of group members’ claims or an individual group member’s claim are ‘complex and diverse’. Consequently, it may be permissible to use s 33S if using s 33Q or s 33R would prevent the expeditious resolution of the representative proceedings so that judgments may be entered and damages paid to those without the ‘complex and diverse’ issues. The Explanatory Memorandum has also been relied on as an aid to interpretation to find that s 33S(a) cannot be used to give directions in relation to a pre-existing proceeding: Oliver v Commonwealth Bank of Australia (No 2) (2012) 205 FCR 540; [2012] FCA 755 at [13]–[14]. Rather, s 33S empowers the court to order the commencement of new proceedings. 19.2 In Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27, Mobil sought to demonstrate that the provisions of Supreme Court Act 1986 (Vic) Pt 4A conferred on the Supreme Court of Victoria an impermissible extraterritorial operation that was incompatible with the federal Constitution. The High Court rejected the argument. Kirby J in a separate judgment observed that it had not been demonstrated that any conflict existed between different states’ laws. The most that Mobil had shown was that there was a potential for state laws to conflict. Kirby J observed (at [137]): One of the requirements for bringing proceedings under Pt 4A of the Act is that the group members’ claims should give rise to a substantial common question of law or fact. This requirement, and the court in which its implementation is reposed, affords a strong assurance against the possibility that the claims of a group member, covered by an order under Pt 4A, would not have a sufficient connection with Victoria. It is true that, in an analogous context, the word ‘substantial’ in the foregoing criterion has been read as meaning no more than ‘real or of substance’. However, it is impossible to believe that if, by reason of differences in the laws of different states, different group members’ claims were affected by different substantive rules, such claims would not be classified as unlikely to give rise to a ‘common question of fact’. And if only part of an interstate group member’s claim had a sufficient connection with Victoria, the Supreme Court could make orders under ss 33Q or 33S of the Act, excluding or exempting those persons whose rights or obligations were differently provided for under another state’s laws.

Kirby J’s reasoning suggests ss 33Q and 33S are the way to deal with group members whose rights or obligations were to be determined under a different state’s laws. Presumably, if applying different laws cannot properly or

conveniently be dealt with under s 33Q or s 33R, then s 33S may be called upon. [page 280]

Proceedings, Group Proceeding and Representative Proceeding 19.3 The difficulty with the s 33S structure in the federal provision is that sub-group issues must be determined in another representative proceeding and individual issues determined in a non-representative proceeding. It may be that the sub-group is relatively small and a representative proceeding is not an appropriate approach. The Victorian, New South Wales and Queensland provisions are much more flexible in this regard. 19.4 In the Victorian, New South Wales and Queensland provisions, the distinction between proceedings and representative or group proceedings has less significance as another proceeding, whether or not a ‘group proceeding’, may be used. In the Victorian provision, the reference to group proceeding is consistent with the regime’s terminology. In s 33A, group proceeding is defined as meaning ‘a proceeding commenced under this Part’, that is, Supreme Court Act 1986 (Vic) Pt 4A. However, the use of the term group proceeding in the New South Wales provision is inconsistent with the rest of the New South Wales regime which speaks of representative proceeding. In s 155, which contains the definitions, there is no reference to group proceeding; rather, representative proceeding appears and refers to s 157. The most likely explanation for the use of the term group proceeding is a drafting error which occurred when New South Wales chose to use the Victorian version of s 33S. 19.5 In the federal provision, the word ‘proceeding’ in s 33S(a) appears to mean ‘proceeding’ within s 4 rather than ‘representative proceeding’ as discussed in Community and Public Sector Union v Victoria (1999) 90 IR 4; [1999] FCA 743 at [18]–[19]. Taken in context it is logical that if the issue

concerns only the claim of a particular member it would be resolved through a non-representative proceeding, as presumably there are no other persons or entities who have that same issue to be resolved.

Alternative to s 33P 19.6 Although not expressly stated in s 33S, the provision appears to provide an alternative path to discontinuance under s 33L, s 33M or s 33N and reliance on s 33P, that is, for the representative party to remain as an applicant in a non-representative proceeding with other group members being afforded the opportunity to be joined as applicants. Section 33P does not allow for an alternative representative proceeding. Instead, it prescribes joinder as the appropriate response. Section 33S does not depend on the original representative proceeding being discontinued but rather allows for a separate proceeding or representative proceeding. However, for s 33S to be enlivened it must be improper or inconvenient to utilise s 33Q or s 33R. [page 281]

• CASE LAW • 19.7

Oliver v Commonwealth Bank of Australia (No 2) (2012) 205 FCR 540; [2012] FCA 755 (Perram J)

Representative proceedings were commenced in the Federal Court against the Commonwealth Bank of Australia in relation to the collapse of Storm Financial Limited on 1 July 2010. Five weeks after the filing of the representative proceeding, the same solicitors filed another proceeding on behalf of Dr Oliver. Broadly, the subject matter of the suit was the same. On 23 December 2010, the same solicitors commenced another proceeding on behalf of Dr Irving that was also the same as the representative proceeding.

The consideration of s 33S arose in the context where the respondent submitted that it is prima facie vexatious and oppressive for a person who has not opted out of a representative proceeding (when the opt-out time has passed) to maintain ordinary proceedings against the same respondent dealing with substantially the same subject matter. The applicants sought to rely on s 33S(a) to have their proceedings stayed and transferred to the docket of the judge responsible for the representative proceeding so that ‘the present proceedings might then later be used as a vehicle for resolving, after the determination of the common issues in the [representative] proceedings, the specific matters arising in their cases’: at [9]. The submission put forward by the applicant was that the expression ‘directions relating to the commencement and conduct of a separate proceeding’ should be read as meaning ‘directions relating to the commencement of separate proceedings or the conduct of a separate proceeding’: at [11]. In other words, that s 33S would permit the court to give directions for the conduct of the existing proceedings (rather than the commencement of new proceedings). Perram J rejected this construction based on the heading of the provision and the Explanatory Memorandum to the Federal Court of Australia Amendment Act 1991 (Cth).

[page 283]

CHAPTER 20 Adequacy of Representation: s 33T • OVERVIEW • Section 33T empowers the court to substitute another group member as the representative party upon an application by a group member. The power to substitute also extends to sub-group representatives. Neither the court nor the respondent is empowered to make an application under s 33T. Where the court or a respondent believes that a representative party may not be acting in the group members’ interests, then resort will need to be made to s 33N (Chapter 15) or s 33ZF (Chapter 32).

• LEGISLATION • Section 33T, Federal Court of Australia Act 1976 (Cth) Adequacy of representation (1) If, on an application by a group member, it appears to the Court that a representative party is not able adequately to represent the interests of the group members, the Court may substitute another group member as representative party and may make such other orders as it thinks fit. (2) If, on an application by a sub-group member, it appears to the Court that a sub-group representative party is not able adequately to represent the interests of the sub-group members, the Court may substitute another person as sub-group representative party and may make such other orders as it thinks fit.

Section 33T, Supreme Court Act 1986 (Vic) Adequacy of representation (1) If, on an application by a group member, it appears to the Court that the plaintiff is not able adequately to represent the interests of the group members, the Court may substitute another group member as plaintiff and may make such other orders as it thinks fit. [page 284] (2) If, on an application by a sub-group member, it appears to the Court that the sub-group representative party is not able adequately to represent the interests of the sub-group members, the Court may substitute another person as sub-group representative party and may make such other orders as it thinks fit.

Section 171, Civil Procedure Act 2005 (NSW) Adequacy of representation (1) If, on application by a group member, it appears to the Court that a representative party is not able adequately to represent the interests of the group members, the Court may substitute another group member as representative party and make such other orders as it thinks fit. (2) If, on application by a sub-group member, it appears to the Court that a sub-group representative party is not able adequately to represent the interests of the sub-group members, the Court may substitute another person as sub-group representative party and may make such other orders as it thinks fit.

Section 103P, Civil Proceedings Act 2011 (Qld) Adequacy of representation (1) If, on application by a group member, the court considers that a representative party is not able adequately to represent the interests of the group members, the court may— (a) substitute another group member as the representative party; and (b) make any other orders in relation to the substitution it considers appropriate. (2) If, on application by a sub-group member, the court considers that the sub-group representative party is not able adequately to represent the interests of the sub-group members, the court may— (a) substitute another person as the sub-group representative party; and (b) make any other orders in relation to the substitution it considers appropriate.

[page 285]

• COMMENTARY • ‘Not Able Adequately to Represent the Interests of the Group Members’ 20.1 A representative party may be an inadequate representative where their conduct may harm the claims of the group members because of: conflicts between the representative party and the group’s interests; actions that are against, prejudicial or harmful to the group members’ interests; or incompetence or inability to perform the representative role (including

through poor health). This list is not exclusive. The standard is also different from the usual standard applied by a court when determining whether to join or remove a party in an ordinary proceeding. In Wilson v South Australia [2017] FCA 219, Charlesworth J noted (at [40]): The power under s 33T of the FCA Act … does not involve an assessment of whether the representative is a ‘desirable or necessary party’ of the kind that would be made on an application to ‘join or remove a party’ within the meaning of that phrase as I have construed it. Rather, the purpose of the power is to give effect to the claim group’s authorisation of one or more persons to continue the application on their behalf.

The ALRC in its report ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) recommended that the court should be able to replace the representative party ‘if he or she is not conducting group members’ proceedings or is unable to conduct group members’ proceedings, in the interests of group members’: at [180]. The ALRC drew on two analogies: removal of a tutor conducting proceedings for an infant or disabled person; and the adequacy of representation requirement in US class action procedure (Federal Rules of Civil Procedure (US) r 23(a)). The removal of a tutor was ordered by the court where a ‘next friend was acting improperly and against the infant’s interests’ (Re Birchall (1880) 16 Ch D 41 at 42), and where the behaviour of a next friend was ‘prejudicial to her (the child’s) interests’ (Re Taylor’s Application [1972] 2 QB 369 at 382). 20.2 Section 33T has been applied without detailed consideration in the case law, but it seems the power will only be exercised where there is an actual incompatibility of interests. 20.3 The provision was applied in Revian v Dasford Holdings Pty Ltd [2002] FCA 1119 (applicants were trustees of a discretionary trust but at the time of the commencement of the proceedings had vacated the office of trustee due to the trust deed specifying that trustees vacated their office upon becoming subject

[page 286] to a bankruptcy law) and Francey v Sharpe Development Group Pty Ltd [2005] FCA 1059 (applicant replaced by group member but reasons for replacement not disclosed) without elaboration. 20.4 In Tongue v Tamworth City Council (2004) 141 FCR 233; [2004] FCA 1702, the court dealt with the substitution of a representative party through s 33W (Chapter 23 dealing with settlement of representative party’s claim) but stated that if the motions were governed by s 33T, the applicant was not able to adequately represent the interests of group members due to ill health and the perception that he had lost the confidence of the group members: at [52]. Ill health is an example of an inability to perform the representative role. The loss of confidence of the group members may be contrasted with Glesson CJ’s observation in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 at [5], that Supreme Court Act 1986 (Vic) s 33T, ‘is not a mechanism for the plaintiff to be replaced on the application of group members who disagree with the way the case is being run’. 20.5 In Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 464; 118 ALR 510 at 517, in the context of an application under s 33N, Wilcox J held that the claim made by the applicant on its own behalf differed from the claims made by the group members but as the claims were not incompatible no conflict arose. In Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc (1998) 83 FCR 424 at 444–6, in the context of a challenge to the standing of the applicant, O’Loughlin J followed Tropical Shine. The ACCC sought an injunction while the group members sought damages as a result of an alleged pyramid selling scheme. The claims of the applicant and the group members were the same in that both needed to establish a contravention of Trade Practices Act 1974 (Cth) s 61(2A) but they differed as to the relief sought. No conflict of interest was found. Moreover, s 33C(2)(a)(iv) permits the use

of a representative proceeding where the relief sought is not the same for all persons. 20.6 The Federal Rules of Civil Procedure (US) r 23(a)(4) states that a prerequisite to the commencement of a class action is that ‘… the representative parties will fairly and adequately protect the interests of the class’. In Amchem Products, Inc v Windsor 521 US 591 at 625–6 (1997), the Supreme Court of the United States held that: ‘The adequacy inquiry under r 23(a)(4) serves to uncover conflicts of interest between named parties and the class they seek to represent … [A] class representative must be part of the class and possess the same interest and suffer the same injury as the class members’. In Smith v Swormstedt 57 US 288 at 303 (1850), the Supreme Court observed that ‘care must be taken that persons are brought on the record fairly representing the interest or right involved’ to ensure that class members’ interests will be protected. The requirement of an alignment of interests between the representative and the absent parties was ‘constitutionalised’ in Hansberry v Lee [page 287] 311 US 32 at 42–3 (1940), where the Supreme Court held that adequate representation of interests was necessary to meet constitutional due process requirements for binding non-parties. 20.7 Adequate representation was also considered in Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398; 127 ALR 76; [1995] HCA 9. The plaintiffs originally sought a declaration of the meaning of a legislative provision and a declaration that contracts that violated that provision were null and void. However, the latter declaration was subsequently deleted from the statement of claim. Toohey and Gaudron JJ observed that while all of the class has the same interest in the determination of the legislation’s meaning, the class may differ as to whether they want their contracts

rendered void or would prefer to keep the contract on foot: at 421. A representative party seeking to void the contract is not an adequate representative for class members who have the conflicting interest of wanting to retain the contract. Inadequacy was also addressed by Brennan J in Carnie v Esanda Finance Corporation Ltd at 408, where his Honour observed: [I]t is precisely because of the flexible utility of the representative action that judicial control of its conduct is important, to ensure not only that the litigation as between the plaintiff and defendant is efficiently disposed of but also that the interests of those who are absent but represented are not prejudiced by the conduct of the litigation on their behalf. The selfproclaimed carrier of a litigious banner may prove to be an indolent or incompetent champion of the common cause in the courtroom. As Vinelott J. said in the course of his judgment in Prudential Assurance Co. Ltd. v Newman Industries Ltd. [[1981] Ch 229 at 255], the court must be satisfied that ‘the issues common to every member of the class will be decided after full discovery and in the light of all the evidence capable of being adduced in favour of the claim’. I would add that if, for any reason, the court is not satisfied that the interests of the absent but represented class are being properly advanced, the court should exclude the represented persons from the action [Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021 at 1040]. That power can be exercised at any time before the judgment is perfected.

Effect of Order Under s 33T 20.8 An order under s 33T does not remove the representative party from the proceedings. They will still be a group member. In Wilson v South Australia [2017] FCA 219, Charlesworth J discussed the operation of the provision and its impact on the representative party (at [40]): A representative party who is removed and substituted in the exercise of that power [s 33T] does not, by reason of the removal, cease to be a group member and may, notwithstanding the removal, ultimately become the recipient of an award of damages under s 33Z(1)(e). The substitution of the representative party does not affect the legal interests of the other group members in the

[page 288] outcome of the proceedings. In exercising the power under s 33T the Court is not required to make any assessment as to whether there exist any rights and liabilities as between the representative party and the respondents of the kind that would ordinarily be made on an

application to remove a party under, for example, s 20(5)(a) of the FCA Act or r 9.08 of the Rules: see, for example News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410.

Safeguard for Group Members 20.9 In Wong v Silkfield Pty Ltd (1999) 199 CLR 255; 165 ALR 373; [1999] HCA 48 at [25], the High Court referred to s 33T as a ‘safeguard’. 20.10 In Wilson v South Australia [2017] FCA 219, Charlesworth J noted that the purpose of s 33T was as follows (at [40]): … the purpose of the power conferred by s 33T is to ensure that the interests of those persons whose legal interests will be affected by the outcome of the action are adequately represented by the representative party.

20.11 Other ‘safeguard’ provisions include the right to opt out in s 33J (Chapter 10) and the need for various notices (Chapter 24). Although representative proceedings may be commenced on behalf of group members without their knowledge or consent, s 33T necessitates that the proceedings be conducted in the group members’ interests, or the representative party may be removed. 20.12 While s 33T (and other safeguard provisions) operate to protect the interests of group members, and contemplate some level of active involvement in the proceedings, that does not mean that group members are required to use those provisions to ensure that every aspect of their individual case is heard and determined as part of the representative proceedings: see Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11, where Gordon J observed (at [126]): There are few provisions in Pt 4A that contemplate an active role for, or give control to, group members in a group proceeding. Section 33T is one of them. Section 33T(1) provides that if, ‘on an application by a group member, it appears to the Court that the plaintiff is not able adequately to represent the interests of the group members, the Court may substitute another group member as plaintiff and may make such other orders as it thinks fit’. It contemplates a group member making an application in the context of a group proceeding. [Emphasis added]

20.13

However, in Timbercorp, the court held that even though there

were some provisions which envisaged an active role for group members, the true nature of a representative proceeding insofar as it involved group members was the extent to which the claims gave rise to commonality and no more. Accordingly, the group members were not estopped from raising defences in subsequent proceedings (which were individual and not raised in the representative proceeding). [page 289]

‘On an Application by a Group Member/Sub-Group Member’ 20.14 Section 33T is drafted so that the court’s discretionary power to substitute a representative party only arises if an application is made by a group member, or in the case of a sub-group representative party, on an application by a subgroup member. The burden of proving inadequate representation therefore falls on the group member seeking the removal of the representative party. See ALRC, ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988), at [179]. Reliance on a group member making an application is potentially problematic. A group member’s ability to be well informed is negatively affected by two conditions. Unidentified group members may be unaware of their group membership and so are unable to raise objections to a representative proceeding they do not know about. Identified group members associated with the representative party, usually through having the same lawyer, are dependent on the representative party and their lawyer for information. The likelihood of group members being independently well informed is therefore low. See Michael Legg, ‘Role of the Judge in the Settlement of Representative Proceedings: Lessons from the United States’ Class Action Experience’ (2004) 78 Australian Law Journal 58 at 64. The limitations imposed by s 33T mean that a judge can only police the inadequacy of representation indirectly by raising the issue under s 33N(1) (Chapter 15), which allows for a proceeding to be discontinued if the use of a representative proceeding is inefficient or inappropriate; or under s 33ZF

(Chapter 32), which grants the judge power to ‘make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding’. See Michael Legg, ‘Role of the Judge in the Settlement of Representative Proceedings: Lessons from the United States’ Class Action Experience’, above. The concept of the judge taking action to protect group members from an inadequate representative is consistent with precedent on the same issue in representative actions from the Court of Chancery: Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 at 76; 28 ALR 95 (‘It was no doubt the duty of the Court in such suits to see that the absent interests were fairly and honestly represented’); Carnie v Esanda Finance Corporation Ltd at 408; Oasis Fund Management Ltd v Royal Bank of Scotland NV [2010] NSWSC 584 at [17]– [21].

Costs of Proceeding Where Change of Representative Party 20.15 A recurrent theme in the case law has been the liability of the replacement representative party for costs incurred prior to them becoming the representative party should the proceedings ultimately be unsuccessful and a costs order is made in favour of the respondents. In Revian v Dasford Holdings Pty Ltd [2002] FCA 1119, representative proceedings had been commenced on behalf of a number of tenants of a shopping centre against the owner of the shopping centre and a real estate agency. At the time of commencement of the proceedings, the representative party was held to have lacked capacity to institute the proceedings as a trustee. French J made an [page 290] order for the removal of the representative party and noted (at [15]): ‘Of course, any group member who is substituted as an applicant will become liable to pay the costs of the proceedings thereafter if unsuccessful’. 20.16

In Tongue v Tamworth City Council, the representative party settled

his individual claim and his removal was governed by s 33W. However, the applicant had sought to rely on s 33T. Another group member, Reganam Pty Ltd, was willing to be appointed as the representative party, but sought to limit its liability for costs to those incurred after its appointment as the representative party: at [2]. Reganam argued that such a limitation should apply because prior to becoming the representative party it was a group member that was protected from a costs order by s 43(1A) and also placed reliance on French J’s statement in Revian v Dasford Holdings Pty Ltd. Jacobson J found that French J had not stated a general rule that in all cases the substituted party was only liable for costs from the date of the substitution but was only addressing the facts of that particular case: at [45]. Jacobson J found that he had power to make an order addressing costs under a number of heads, including s 33T (at [53]), but declined to exercise the power in the current case because Reganam sought to be substituted as the representative party in proceedings which were at an advanced state of preparation and Reganam was able to take the benefit of those preparations. The question of what costs order should be made was better addressed at the conclusion of the proceeding once the outcome of the trial was known: at [49]–[50]. See also Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2010] FCA 1302 at [10]–[16], following the reasoning in Tongue v Tamworth City Council.

New South Wales and Queensland — Inadequacy and Discontinuance 20.17 The representative proceeding regime in New South Wales and Queensland not only provides for a group member to approach the court to replace an inadequate representative (under s 171 in New South Wales, and s 103P in Queensland), but also includes s 166(1)(d) in New South Wales, and s 103K(1)(d) in Queensland, which provides for the court or the defendant to seek an order for the discontinuance of the proceedings (using the New South Wales provision as an example): (1) The Court may, on application by the defendant or of its own motion, order that

proceedings no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because: … (d) a representative party is not able to adequately represent the interests of the group members.

While the federal and Victorian regimes do not include specific reference to the representative party in the s 33N criteria, the overarching power to discontinue [page 291] proceedings because ‘it is otherwise inappropriate that the claims be pursued by means of a representative proceeding’ clearly encompasses a situation where a representative party is not able to adequately represent the interests of group members.

• CASE LAW • 20.18

Wilson v South Australia [2017] FCA 219 (Charlesworth J)

In Wilson v South Australia [2017] FCA 219 (Wilson), the court recognised the distinct nature of other forms of proceedings commenced within the court. Wilson was a Native Title case where an appeal was sought against a judgment which had the effect of replacing the applicant in the underlying proceedings (which comprised of six persons) with a new applicant (comprised of seven different persons): Wilson v South Australia (No 2) [2016] FCA 812. The orders for substitution were made pursuant to Native Title Act 1993 (Cth) s 66B(1), which has some similarities with Federal Court of Australia Act s 33T, which deals with adequacy of representation and substitution of a ‘representative party’.

One issue in the case was whether the appeal was competent given the operation of Federal Court Act s 24(1AA), which relevantly provides: (1AA) An appeal must not be brought from a judgment referred to in paragraph (1)(a), (d) or (e) if the judgment is: … (b) a decision to do, or not to do, any of the following: (i) join or remove a party; …

The court reviewed s 33T and observed (at [26]): A representative party who is removed and substituted in the exercise of that power [s 33T] does not, by reason of the removal, cease to be a group member and may, notwithstanding the removal, ultimately become the recipient of an award of damages under s 33Z(1)(e). The substitution of the representative party does not affect the legal interests of the other group members in the outcome of the proceedings. In exercising the power under s 33T the Court is not required to make any assessment as to whether there exist any rights and liabilities as between the representative party and the respondents of the kind that would ordinarily be made on an application to remove a party under, for example, s 20(5)(a) of the FCA Act or r 9.08 of the Rules: see, for example News Ltd v Australian Rugby Football League Ltd

[page 292] (1996) 64 FCR 410. Rather, the purpose of the power conferred by s 33T is to ensure that the interests of those persons whose legal interests will be affected by the outcome of the action are adequately represented by the representative party.

Charlesworth J concluded (at [28]–[29]): In light of the provisions to which I have referred [including s 33T], the reference in s 24(1AA)(b)(i) to a ‘decision to … join or remove a party’ should not be construed so as to encompass a decision to substitute a ‘representative party’ made in the exercise of the power conferred by s 33T of the FCA Act or other decisions having the same purpose and effect. The sources of the power to remove a party and the power to substitute a representative party are distinct, the purposes of the powers are distinct and, most importantly, the legal effects of the exercise of the powers are distinct. … The decision sought to be appealed against did not involve the exercise of the power conferred under s 33T of the FCA Act nor the power conferred under s 20(5)(b) of the FCA Act or the Rules. The power exercised was that conferred by s 66B of the NT Act. For the reasons that follow, I consider decisions made pursuant to s 66B(1) of the NT Act to be

analogous to decisions made pursuant to s 33T of the FCA Act so as to fall outside of the operation of s 24(1AA)(b)(i).

In considering s 33T, Charlesworth J noted (at [40]): The power under s 33T of the FCA Act … does not involve an assessment of whether the representative is a ‘desirable or necessary party’ of the kind that would be made on an application to ‘join or remove a party’ within the meaning of that phrase as I have construed it. Rather, the purpose of the power is to give effect to the claim group’s authorisation of one or more persons to continue the application on their behalf.

20.19

Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 339 ALR 11 (French CJ, Kiefel, Keane, Nettle and Gordon JJ)

In Timbercorp, the court held that even though there were some provisions which envisaged an active role for group members, the true nature of a representative proceeding insofar as it involved group members was the extent to which the claims gave rise to commonality and no more. Accordingly, the group members were not estopped from raising defences in subsequent proceedings (which were individual and not raised in the representative proceeding). One provision which envisaged a potentially active role for group members is s 33T. Gordon J observed (at [126]): [page 293] There are few provisions in Pt 4A that contemplate an active role for, or give control to, group members in a group proceeding. Section 33T is one of them. Section 33T(1) provides that if, ‘on an application by a group member, it appears to the Court that the plaintiff is not able adequately to represent the interests of the group members, the Court may substitute another group member as plaintiff and may make such other orders as it thinks fit’. It contemplates a group member making an application in the context of a group proceeding. [Emphasis added]

20.20

Tropical Shine Holdings Pty Ltd (t/as KC Country) v Lake Gesture Pty Ltd

(1993) 45 FCR 457; 118 ALR 510 (Wilcox J) The applicant and the respondents both carried on business as importers and vendors of household furniture. The respondents were a group of companies who traded under the name of ‘Federation Furniture Company’. The applicant sought orders, including injunctive orders with respect to the respondents’ advertising, and damages. It alleged that the respondents were advertising in such a way as to mislead or deceive potential purchasers about the quality and price of their furniture. The application encompassed group members in terms of those persons ‘who have suffered … or are likely to suffer loss or damage by reason of the respondent’s conduct alleged in the statement of claim being persons who bought furniture at the sales, advertised, promoted and conducted by the first respondent as set out below’. The applicant’s case differed from the group members’ case in that it purchased items of furniture to have them analysed, not because it was misled by the respondents’ advertising. The respondents argued, inter alia, that the court should make an order under s 33N(1)(c) or (d) that the proceedings no longer continue under Pt IVA. Wilcox J analysed the claims made by the applicant and the group members and observed (at FCR 464; ALR 517): In cases where the personal claim of the representative party is substantially similar to that of the group members, there is likely to be little difficulty about using a representative proceeding. The elements of both claims will coincide; there will be no conflict between the case needed to be proved by the representative party on his/her own behalf and that needed to make good the group members’ claims. The court would not normally reach the conclusion mentioned in either s 33N(1)(c) or (d). To the extent that the claims diverge, problems may arise. The efficiency of the proceeding may be compromised by the court having to consider different causes of action. If the cases are so divergent as to be incompatible, there will be a conflict between the representative party’s personal interest and the interests of the group members which will certainly lead the court to conclude that it is inappropriate that the claims be pursued by means of a representative proceeding. Because the personal claim of Tropical Shine differs from that of the group members, I have considered whether it would be inappropriate that the claims be pursued in a representative proceeding. I have concluded that this would

[page 294]

not be inappropriate. Although the claims differ, the applicant’s personal claim is not incompatible with the group members’ claims. On the contrary, it is an essential ingredient of the applicant’s personal claim that people were misled by the advertisements into purchasing furniture from Federation Furniture Company. The cases divide only after that fact is established. The group members’ claims require that they then establish their individual losses; the applicant’s claim requires proof that, absent the influence of the advertisement, the people who purchased from Federation Furniture Company would have dealt with it. Having regard to the substantial overlap in the facts requiring to be established and the absence of any discernible conflict of interest, it seems to me impossible to conclude that this will not be an efficient and effective means of dealing with the various claims. Neither is there any reason to think it otherwise inappropriate that the claims be pursued in this way.

20.21

Tongue v Tamworth City Council (2004) 141 FCR 233; [2004] FCA 1702 (Jacobson J)

The representative party settled his individual claim and his removal was governed by s 33W. However, the applicant had sought to rely on s 33T and to be replaced due to ill health and because he had lost the confidence of the group members: at [11]–[12]. Another group member, Reganam Pty Ltd, was willing to be appointed as the representative party, but sought to limit its liability for costs to those incurred after its appointment as the representative party: at [2]. Reganam argued that such a limitation should apply because prior to becoming the representative party it was a group member that was protected from a costs order by s 43(1A) and also placed reliance on French J’s statement in Revian v Dasford Holdings Pty Ltd. Jacobson J found that French J had not stated a general rule that in all cases the substituted party was only liable for costs from the date of the substitution but was only addressing the facts of that particular case: at [45]. Jacobson J found that he had power to make an order addressing costs under a number of heads, including s 33T (at [53]), but declined to exercise the power in the current case (at [49]–[50]): [Reganam] would, if joined, obtain whatever benefit flows from the preparation which has taken place to date. Statements of lay witnesses, including Mr Kelleher, have been filed and expert statements have also been filed with the Court. The respondent has prepared to meet the case. It seems to me to be plain that the question of what costs orders are appropriate, in the event that Reganam is substituted and if it is unsuccessful at the final hearing, must be a matter to be considered after final judgment is delivered. Mr Robertson submitted that it was unfair to Reganam to expose it to the risk of costs

incurred by the respondent prior to the substitution of Reganam as the representative party. But there is nothing to suggest that any costs incurred to date are out of the ordinary. The position is that Reganam seeks to be substituted as the representative party in proceedings which are at an advanced state of preparation for trial. The question of what costs order will

[page 295] be made at the conclusion of the proceeding will depend upon the outcome of the trial. There is no reason why the respondent ought to be deprived, at this stage, of the potential to obtain a costs order for the whole of the proceedings if it is unsuccessful at the final hearing.

Jacobson J also stated that if the motions were governed by s 33T, the applicant was not able to adequately represent the interests of group members due to ill health and the perception that he had lost the confidence of the group members: at [52].

[page 297]

CHAPTER 21 Stay of Execution: s 33U • OVERVIEW • The stay of execution provision was included to address the situation where a respondent commences a proceeding against a group member. A separate proceeding would most commonly be commenced by a respondent against a group member by way of cross claim. The provision gives the court power to stay any relief awarded to the group member until the cross claim is determined.

• LEGISLATION • Section 33U, Federal Court of Australia Act 1976 (Cth) Stay of execution in certain circumstances Where a respondent in a representative proceeding commences a proceeding in the Court against a group member, the Court may order a stay of execution in respect of any relief awarded to the group member in the representative proceeding until the other proceeding is determined.

Section 33U, Supreme Court Act 1986 (Vic) Stay of execution If a defendant commences a proceeding in the Court against a group member, the Court may order a stay of execution in respect of any relief

awarded to the group member in the group proceeding until the other proceeding is determined.

Section 172, Civil Procedure Act 2005 (NSW) Stay of execution in certain circumstances If a defendant in representative proceedings commences proceedings in the Court against a group member, the Court may order a stay of execution in respect of any relief awarded to the group member in the representative proceedings until the other proceedings are determined.

[page 298]

Section 103Q, Civil Proceedings Act 2011 (Qld) Stay of execution in certain circumstances If a defendant starts a proceeding in the court against a group member, the court may order a stay of execution for any relief awarded to the group member in the representative proceeding until the other proceeding is decided.

• COMMENTARY • Cross Claims 21.1 A respondent is most likely to commence proceedings against a group member by way of cross claim. Cross claim is defined in the dictionary to the Federal Court Rules 2011 (Cth) as ‘includes a counter claim, cross action, set off and third party claim’. Rule 15.01 provides:

A respondent may make a cross-claim in a proceeding: (a) against an applicant — for any relief to which the respondent would be entitled against the applicant in a separate proceeding; or (b) against any other respondent or person — for any relief, including for contribution or indemnity, that is related to the subject of the proceeding.

21.2 Cross claims are independent suits but for convenience and to avoid a multiplicity of proceedings they are heard with the original claim. The same approach is adopted in representative proceedings. See Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 13) [2013] FCA 859 at [26] (referring to a cross claim by the first respondent against the first applicant); Brisbane Broncos Leagues Club Ltd v Alleasing Finance Australia Pty Ltd (No 2) [2012] FCA 1112 (cross claims dealt with as part of settlement); Kirby v Centro Properties Ltd (2010) 189 FCR 301 at [1]–[3] (where the respondents cross claimed against the corporation’s auditors). The commencement of a representative proceeding does not prevent a respondent from commencing a cross claim against the representative party and any known group member in respect of any matter which could be the subject of a separate principal proceeding in the court. However, in many representative proceedings the respondent will not know the identity of the group members. If a group member’s identity is not known until after liability is determined and individual claims are being established, a respondent may elect at that point in time to commence a cross claim. Section 33U provides the court with power to stay any relief which has been awarded to the group member until such time as the cross claim has been determined.

[page 299]

CHAPTER 22 Settlement and Discontinuance of a Representative Proceeding: s 33V • OVERVIEW • Section 33V provides that a representative proceeding may not be settled or discontinued without the approval of the court. When considering s 33V, the courts have recognised that there is a need to balance the desire to settle proceedings to avoid costly litigation and uncertainties associated with litigation with the need to ensure that the interests of both represented parties and group members are adequately protected. The court takes its supervisory role very seriously and will not simply ‘rubber stamp’ settlements reached by the parties. Section 33V plays an important role in maintaining the integrity of the representative proceedings regime, particularly where proceedings are brought for and on behalf of an ‘open’ class, which means not all group members will be legally represented.

• LEGISLATION • Section 33V, Federal Court of Australia Act 1976 (Cth) Settlement and discontinuance—representative proceeding (1) A representative proceeding may not be settled or discontinued without the approval of the Court. (2) If the Court gives such an approval, it may make such orders as are

just with respect to the distribution of any money paid under a settlement or paid into the Court.

[page 300]

Section 33V, Supreme Court Act 1986 (Vic) Settlement and discontinuance (1) A group proceeding may not be settled or discontinued without the approval of the Court. (2) If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court.

Section 173, Civil Procedure Act 2005 (NSW) Approval of Court required for settlement and discontinuance (1) Representative proceedings may not be settled or discontinued without the approval of the Court. (2) If the Court gives such approval, it may make such orders as are just with respect to the distribution of any money, including interest, paid under a settlement or paid into the Court.

Section 103R, Civil Proceedings Act 2011(Qld) Settlement and discontinuance (1) A representative proceeding may not be settled or discontinued without the approval of the court. (2) If the court gives approval under subsection (1), it may make any

orders it considers just for the distribution of money paid under a settlement or paid into the court.

• COMMENTARY • Purpose of Provision 22.1 The purpose to be served by s 33V is to ensure that the court is satisfied that any settlement or discontinuance of representative proceedings has been undertaken in the interests of the group members as a whole and not just in the interests of the representative party and respondent: see Australian Competition and Consumer Commission (ACCC) v Chats House Investments Pty Ltd (1996) 71 FCR 250; 142 ALR 177; 22 ACSR 539 (Chats House) at 184; Williams v FAI Home Security Pty Ltd (2000) 180 ALR 459; [2000] FCA 1925 (Williams); Darwalla [page 301] Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322; [2006] FCA 1388 (Darwalla); Vernon v Village Life Ltd [2009] FCA 516 at [44]–[45]; Jarra Creek Central Packaging Shed Pty Ltd v Amcor [2011] FCA 671 at [7]; Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 at [62]. The Full Court of the Federal Court stated in Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [7]: Justice will be satisfied where a settlement is ‘fair and reasonable having regard to the claims made by group members who will be bound by it’. [Citations omitted]

22.2 The court’s task has been described as ‘important and onerous’, where the court’s role is ‘acting akin to a guardian’ of the unrepresented group members: see ASIC v Richards at [8]; Lopez v Starworld Enterprises Pty Ltd [1999] FCA 104 at [16] per Finkelstein J; Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457 at [4]; P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 at [23] per Finkelstein J;

Clarke v Great Southern Finance Pty Ltd (recs & mgrs apptd) (in liq) [2014] VSC 516 at [32]; Downie v Spiral Foods Pty Ltd [2015] VSC 190 at [44]–[46]. See also Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 408. 22.3 The court has recognised that the interests of group members may be prejudiced by their absence or lack of representation: see ASIC v Richards at [8]; see also Chats House at 258; Darwalla Milling Co Pty Ltd v Hoffman-La Roche Ltd (No 2) at [41]; Tasfast Air Freight v Mobil Oil Australia Ltd; Michael Legg, ‘Judge’s Role in Settlement of Representative Proceedings: Lessons from United States Class Actions’ (2004) 78 Australian Law Journal 58. Moreover, the court should be alive to the possibility that a settlement may reflect conflicts of interest, for example, between the applicant and class members, between client and non-client class members or between subgroups within the class, or between the duty of the applicant’s lawyers to client class members and the lawyers’ duty to non-client class members. Further, traditional adversarial positions typically dissipate in the settlement approval context and neither side seeks to critique the settlement from the perspective of class members. Both sides have become ‘friends of the deal’: Kelly v Willmott Forests Ltd (in liq) (No 4) at [63]. See also Michael Legg, ‘Judge’s Role in Settlement of Representative Proceedings: Lessons from United States’ Class Actions’ (2004) 78 Australian Law Journal 58 at 68, cited in Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311 at [38]; Mercedes Holdings Pty Ltd v Waters (No 1) [2010] FCA 124 at [9] (‘since the representative parties and their lawyers are at the coalface of the suit where time, stress and money are being consumed in the furnace of litigation, it is natural that their inclination towards settlement may be affected by a just appreciation of their own positions. Those positions, and the allied interests accompanying them, may not wholly coincide with those of the members of the class’). [page 302] 22.4

Despite the importance of the provision, the legislation provided no

criteria by which approval was to be determined: Australian Law Reform Commission, ‘Managing Justice: A Review of the Federal Civil Justice System’, Report No 89 (2000), at [7.107]. Through the incremental development of case law and then through Federal Court of Australia Practice Notes, the criteria that the court examines when considering an application for approval are now reasonably well established. Helpful summaries of the requirements for class action settlement approval are set out in Matthews v Ausnet Electricity Services Pty Ltd [2014] VSC 663 at [33]– [45]; Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 at [5]; Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 at [113]–[121]. 22.5 Class Actions Practice Note (GPN-CA), 25 October 2016 sets out a summary of the procedural aspects of settlement approval applications at [13] and [14]. Paragraph 14.3 outlines what the court will need to be persuaded of: 14.3 When applying for Court approval of a settlement, the parties will usually need to persuade the Court that: (a) the proposed settlement is fair and reasonable having regard to the claims made on behalf of the class members who will be bound by the settlement; and (b) the proposed settlement has been undertaken in the interests of class members, as well as those of the applicant, and not just in the interests of the applicant and the respondent(s).

Guidance in the Victorian jurisdiction is also provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [13]. These requirements have been described as the two ‘critical questions’: Matthews v Ausnet Electricity Services Pty Ltd at [34]; Downie v Spiral Foods Pty Ltd at [45]; Kamasaee v Commonwealth [2017] VSC 537 at [7]. If court approval is not sought and obtained in respect of a settlement agreement reached between parties to a representative proceeding, the settlement will be without legal effect: see Australian Competition and Consumer Commission v Chats House Investments Pty Ltd at 258. Section 33V is also a provision which is invoked in a large majority of class actions: see Vince Morabito, An Empirical Study of Australia’s Class

Action Regimes: Fifth Report — The First Twenty-Five Years of Class Actions in Australia (Department of Business Law and Taxation, Monash University, July 2017) which provides that approximately 52% of class actions are settled (federal: 49% and state: 63%) and 13.8% of class actions are discontinued (federal: 14.8% and state: 9.6%): at 37.

Settlement and Individual Claims 22.6 A settlement has been defined in Tongue v Council of the City of Tamworth (2004) 141 FCR 233 at [32] as follows: [page 303] In ordinary parlance, for a claim to be settled, it must have been compromised. However, law dictionaries suggest that the element of compromise is not a necessary ingredient. As is said in Butterworth’s Australian Legal Dictionary, at 1073, when a matter has been settled, the parties have reached some kind of agreement and no longer require the Court to deliberate between them. Another dictionary states that a ‘settlement’ means ‘an agreement ending a dispute or law suit’: see Transport Accident Commission v Coyle (2001) 3 VR 589 at [27].

22.7 There is some uncertainty about the extent to which s 33V applies to the settlement of individual group members’ claims. The state of the authorities was conveniently summarised by Sackville J in Courtney v Medtel Pty Ltd (2002) 122 FCR 168 at [45]: If the language of s 33V(1) of the Federal Court Act is given its ordinary meaning, it appears to be concerned, at least primarily, with the settlement or discontinuance of the entire representative proceeding. There is, however, authority to the effect that s 33V(1) has a broader scope. In Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 (ACCC v Chats House), Branson J held that consent orders resolving claims made by the ACCC, as the representative party, against one of three respondents was caught by s 33V(1) and therefore required approval of the Court. Her Honour said this (at 258): The purpose to be served by s 33V(1) is obvious. It is appropriate for the Court to be satisfied that any settlement or discontinuance of representative proceedings has been undertaken in the interests of the group members as a whole, and not just in the interests of the applicant and the respondent. In my view, s 33V proscribes not only complete settlement of proceedings without the

approval of the Court, but also settlement of claims against a joint respondent, or settlement of any substantive claim against a respondent. [Emphasis added.] In King v GIO, Moore J interpreted (at 493 [41]) the bolded words in this passage as referring to the settlement of one of a number of claims against a respondent of the type comprehended by s 33C of the Federal Court Act. His Honour thought that s 33V(1) might also apply where individual offers were made directly to and accepted by all group members, since this would have the practical effect of settling the representative proceedings: King v GIO at 493 [42]. But Moore J did not suggest that s 33V(1) applies to the settlement of claims of individual group members where the settlement does not effectively dispose of the proceedings. It is difficult to apply the language of s 33V(1) to the settlement of some individual claims of group members, at least where the settlement does not entirely resolve one category of claims comprehended by s 33C. Moreover, the legislative history of Pt IVA tells against the suggestion that s 33V(1) is intended to apply to the settlement of the claims of individual group members without the involvement of the applicant. That suggestion is

[page 304] also difficult to reconcile with the specific requirement in s 33W, that a representative party requires the leave of the Court to settle his or her individual claims. Had Parliament intended the same requirement to apply to settlement of the individual claims of group members, it might have been expected to say so.

It has also been suggested that s 33V will apply ‘at least where the substantive claims of certain categories of group members have been settled or discontinued by the representative party, notwithstanding that there may remain some claims for relief by other categories of group members’: see Bray v Hoffman-La Roche Ltd [2003] FCA 1505 at [23] per Merkel J.

Application for Approval 22.8 An application for court approval of a settlement is made by interlocutory application. The Class Actions Practice Note (GPN-CA), 25 October 2016 provides guidance both in terms of the orders typically sought in the interlocutory application as well as the nature of the evidence that the court expects to see in support of the motion: 14.1 An application for the Court’s approval of a proposed settlement must be made by interlocutory application. The orders which are commonly made on such an application include orders for:

(a) at the first return of the application: (i) the confidentiality of evidence to be filed in support of the application for approval; (ii) the timetable for any person to file evidence in respect of the application for approval; and (iii) Court approval of a notice to class members of the proposed settlement. (b) at the second return of the application, Court approval of: (i) the proposed settlement; (ii) any scheme for distribution of any settlement payment; and (iii) arrangements for the reimbursement of any costs incurred by the applicant(s) but not recovered from the respondents. (c) following the completion of any settlement distribution scheme — disposing of the proceeding (eg. by dismissing the application). … 14.5 To the extent relevant, the affidavit or affidavits in support of the application for Court approval should state:

[page 305] (a) how the settlement complies with the criteria for approving a settlement; (b) why the proceeding has been settled on particular terms; (c) the effect of those terms on class members (ie. the quantum of damages they are to receive in exchange for ceasing to pursue their claims and whether class members are treated the same or differently and why); (d) the means of distributing settlement funds; (e) the time at which it is anticipated settlement funds will be received by class members; (f) the frequency of any post-approval report(s) to be provided to the Court regarding the distribution of settlement funds; (g) the terms of the costs agreement including the reasonableness of legal costs; (h) the terms of any litigation funding agreement and its application if the settlement is approved; (i) a response to any arguments against approval of settlement raised by class members; and (j) any issues that the Court directs be addressed.

Notice 22.9 The practice of the Federal Court is to require the applicant to give prior notice to group members advising of the application for settlement approval. However, notice may be dispensed with if it is just to do so: see s 33X(4). A sample of settlement notices is set out in Chapter 44. The Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’ Report 46 (1988) at [218] observed that a representative party’s conduct of proceedings on behalf of group members is analogous with a tutor conducting proceedings on behalf of a disabled person. However, the difference between that situation and that of group members is that ‘the latter are capable of expressing an opinion which should be taken into account’. Consequently, notice is needed so as to give group members the option of coming forward and expressing an opinion on the settlement. 22.10 Class Actions Practice Note (GPN-CA), 25 October 2016 provides guidance as to the content of the notice by specifying what it should usually include (at [14.2]): Notice of the proposed settlement will usually be required to be given to class members. The notice should usually include the following:

[page 306] (a) a statement that the class members have legal rights that may be affected by the proposed settlement; (b) a statement that an individual class member may be affected by a decision whether or not to remain as a class member (in the event that the opt-out date has not already passed or where there is a further opportunity to opt out); (c) a brief description of the factual circumstances giving rise to the litigation; (d) a description of the legal basis of the claims made in the proceedings and the nature of relief sought; (e) a description of the class on whose behalf the proceedings were commenced;

(f) information on how a copy of the statement of claim and other legal documents may be obtained; (g) a summary of the terms of the proposed settlement; (h) information as to any ‘funding equalisation payment’ which affects the ultimate settlement amount received by class members who have not entered into a litigation funding agreement; (i) information on how to obtain a copy of the settlement agreement (except where confidentiality provisions in the settlement agreement preclude disclosure at that time); (j) an explanation of who will benefit from the settlement, including an explanation as to how class members or sub-groups will benefit relative to each other; (k) where all class members are not eligible for settlement benefits — an explanation of who will not be eligible and the reasons for such ineligibility; (l) an explanation of the Court settlement approval process; (m) details of when and where the Court hearing will be and a statement that the class member may attend the Court hearing; (n) an outline of how objections or expressions of support may be communicated, either in writing or by appearing in person or through a legal representative at the hearing; (o) an outline of any steps required to be taken by persons who wish to participate in the settlement (in the event that affirmative steps are required); (p) an outline of the steps required to be taken by persons wishing to opt out of the settlement (if that is possible under the terms of the settlement); and (q) information on how to obtain legal advice and assistance.

[page 307] Similar guidance is provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [12.20]; the Supreme Court of New South Wales Practice Note SC Gen 17 — Supreme Court Representative Proceedings at [11.1] and the Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings at [12].

Role of the Lawyer

22.11 In Lopez v Star World Enterprises Pty Ltd at [15], the Federal Court observed that: … the task of the court in considering an application under section 33V is indeed an onerous one … It is a task in which the court inevitably must rely heavily on the solicitor retained by, and counsel who appears for, the applicant to put before it all matters relevant to the court’s consideration of the matter.

However, see Clarke v Great Southern Finance Pty Ltd (recs & mgrs apptd) (in liq) [2014] VSC 516 at [56], where reliance on the lawyers was less because there had been a full trial of the common issues and a judgment prepared prior to settlement being reached so that the court was ‘in the unique position of holding the most informed view on the respective strengths and weaknesses of the parties’ positions in the litigation’. This will be the exception rather than the usual position. Consequently, a practice has developed whereby the solicitor for the applicant will provide an affidavit in which they address each of the factors listed in Class Actions Practice Note (GPN-CA), 25 October 2016 relevant to the instant litigation. Applicants will also typically provide a written opinion, usually from senior counsel, as to the fairness and reasonableness of the proposed settlement that focuses on prospects of success of the litigation: see, for example, Downie v Spiral Foods Pty Ltd at [150]; Foley v Gay [2016] FCA 273 at [7]. The opinion is accompanied by an application for an order that the exhibited opinion be confidential and not required to be served on the respondents. The opinion may attract client legal privilege depending on the purpose for which the opinion was produced. The absence of advice from counsel has been observed to be ‘a matter of concern’: see Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (No 6) [2013] FCA 447 at [23]. An inadequate opinion on prospects of success was one of the reasons the settlement in the Willmott Forests class action was initially not approved by the court: Kelly v Willmott Forests Ltd (in liq) (No 4) at [12], [280]–[284]. 22.12 In P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) at [4], a suggestion was made that respondents should also bear some of the evidentiary burden in settlement approval hearings:

[page 308] … the respondent’s lawyers should also bear some responsibility for ensuring that the court has all the information that objectively describes the merits of the case and brings to the court’s attention the obstacles to recovery and the benefits to be derived from the proposed settlement.

Similarly, in Pathway Investments Pty Ltd v NAB [2012] VSC 625, Pagone J observed (at [6]): The Court has also had the benefit of an outline of submissions filed by the Defendant in which counsel for the Defendant submitted (as distinct from having expressed an opinion) that the proposed settlement was both fair and reasonable. The submissions have been helpful but the Court might have been better assisted by a confidential opinion from the Defendant’s counsel which included a candid evaluation of the strengths and weaknesses of its case. What will best assist the Court in any given application for approval of a settlement will obviously depend upon the particular case and the particular facts and issues upon which a settlement will depend in that case.

In Richards v Macquarie Bank Ltd (No 4) [2013] FCA 438, the court received opinions from counsel for both the applicant and the respondent. However, in Kelly v Willmott Forests Ltd (in liq) (No 4), Murphy J took a different view (at [76]–[77]): Usually, the applicant’s lawyer will have decided to accept a settlement without knowing the respondent’s view of the weaknesses in its defence or the respondent’s true ‘bottom line’. Requiring the respondent to provide a confidential opinion would put the Court in a better position to assess the applicant’s prospects of success than the applicant’s lawyers. Practical difficulties may also arise if a respondent’s lawyer is required to put on a confidential opinion. It is difficult to know what steps an applicant’s lawyers could take to proceed further with a case if settlement approval were refused on the basis of confidential information provided by the respondent’s lawyer to the Court, which could not be disclosed to the applicant or the applicant’s lawyer. In my view the fairness of a proposed settlement must be assessed by reference to the circumstances which could reasonably be expected to be knowable to the applicant and/or the applicant’s lawyers.

‘Fair and Reasonable’ 22.13 The principles that the court will consider when determining whether a settlement is ‘fair and reasonable’ are well established. It is accepted that each settlement must be dealt with on its own merits by

reference to specific factors which might raise ‘serious doubts as to fairness’: see Darwalla at [39] per Jessup J; Taylor v Telstra Corporation Ltd [2007] FCA 2008 at [58]–[64]. [page 309] The courts commonly cite the observations made by Goldberg J in Williams as a useful guide in considering applications for approval under s 33V. Those factors are repeated in the Practice Note. His Honour stated in Williams (at [19]): Ordinarily the task of a court upon an application such as this is to determine whether the proposed settlement or compromise is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. Ordinarily in such circumstances the court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement.

See also the following cases which refer to Goldberg J’s judgment in Williams: Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [15] per Gordon J; Haslam v Money For Living (Aust) Pty Ltd (admin apptd) [2007] FCA 897 at [20]; Richards v Macquarie Bank Ltd (No 4); Hadchiti v Nufarm Ltd [2012] FCA 1524; Brisbane Broncos Leagues Club Ltd v Alleasing Finance Australia Pty Ltd (No 2) [2012] FCA 1112; Kirby v Centro Properties Ltd (No 6) [2012] FCA 650; Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd [2011] FCA 801; Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 6) [2011] FCA 277; Peterson v Merck Sharp & Dohme (Aust) Pty Ltd (No 6); Camilleri v The Trust Company (Nominees) Ltd at [5]; Downie v Spiral Foods Pty Ltd at [49]. 22.14 However, the court’s role is not to ‘second guess’ the settlement which has been reached. In Darwalla Milling Company Pty Ltd v F HoffmanLa Roche Ltd (No 2) at [50], Jessup J observed: It is not, I consider, the court’s function under section 33V of the Federal Court Act, to

second-guess the applicants’ advisers as to the answer to the question whether the applicants ought to have accepted the respondents’ offer: the court’s function is, relevantly, confined to the question whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one. In settlement negotiations, some parties, and some advisers, tend to be more risk-adverse than others. There is nothing unreasonable involved in either such position and, under section 33V, the court should, up to a point at least, take the applicants and their advisers as it finds them. Neither should the court consider that it knows more about the group members’ businesses than the applicants, or more about the actual risks of litigation than their advisers. So long as the agreed settlement falls within the range of fair and useful outcomes, taking everything into account, it should be regarded as qualifying for approval under section 33V.

[page 310] See also Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194 at [12]. 22.15 The factors outlined in Williams are now reflected in Class Actions Practice Note (GPN-CA), 25 October 2016, which sets out the issues which the court expects to be addressed in any application to approve settlement: 14.4 The material filed in support of an application for Court approval of a settlement will usually be required to address at least the following factors: (a) the complexity and likely duration of the litigation; (b) the reaction of the class to the settlement; (c) the stage of the proceedings; (d) the risks of establishing liability; (e) the risks of establishing loss or damage; (f) the risks of maintaining a class action; (g) the ability of the respondent to withstand a greater judgment; (h) the range of reasonableness of the settlement in light of the best recovery; (i) the range of reasonableness of the settlement in light of all the attendant risks of litigation; and (j) the terms of any advice received from counsel and/or from any independent expert

in relation to the issues which arise in the proceeding.

Goldberg J’s observations were based on a nine-factor test adopted in the United States in Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation 55 F 3d 768 at 785 (3d Cir 1995). However, Jessup J in Darwalla (at [35]) subsequently criticised the use of the US principles on the basis that there was no particular warrant for incorporating the requirements of a foreign class action procedure into Australian procedure. Nonetheless, the criteria remain a useful guide: Haslam v Money For Living (Aust) Pty Ltd (admin apptd) at [20]; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd at [13]; Camilleri v The Trust Company (Nominees) Ltd at [5]; Kelly v Willmott Forests Ltd (in liq) (No 4) at [66]. However, it must be remembered that there is no definitive or exhaustive list: Matthews v Ausnet Electricity Services Pty Ltd at [34]; Downie v Spiral Foods Pty Ltd at [45]; Newstart 123 Pty Ltd v Billabong International Ltd at [13]; City of Swan v McGraw-Hill Companies Inc [2016] FCA 343 at [33]. 22.16 The court also needs to be satisfied that the settlement is fair and reasonable to all group members: ASIC v Richards at [55]. In considering the fairness and reasonableness of the proposed settlement for all group members, the [page 311] court may have regard to the differences between the strengths of the claims being pursued, and also the differences in compensation to be paid to group members. In Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (No 6), Jessup J dismissed an application for settlement approval which did not differentiate between the strengths and weaknesses of group member cases. In that case, the ‘initial trial’ of the lead applicant’s case had already been heard and determined. That meant that there was some indication of the strengths and weaknesses of group member cases by which the proposed settlement could be assessed. His Honour observed that a settlement which did not discriminate between group member claims may be appropriate if there had

not been a determination of issues in the litigation but that this was not such a case (at [16], [17]): If reached in the absence of the determination of any of the questions arising in the litigation, an agreement along the lines set out above might be viewed as a pragmatic compromise to the relevant claims. It would not then be known whether the applicant’s own case would succeed, whether common questions would be answered in terms favourable to group members, and what might be the determined criteria by reference to which the relative strengths and weaknesses of the cases of the various group members would stand to be assessed. A settlement in which all group members got something, in effect, might then be readily understood. However, the present is not such a case. In the case of group members who ingested Vioxx more or less continuously in the period leading to their heart attacks, the findings made, and the answers to the questions given, in this proceeding have, subject to individual issues of causation, given some grounds for optimism. The settlement recognises that circumstance, of course, by providing for the two ‘gates’ to which I have referred. However, it makes no discrimination between group members who have other risk factors which were decisive in the rejection of the applicant’s case by the Full Court and group members who have no other risk factors. Not only is this an important discrimination, it is, as it seems to me, the very basis upon which the applicant’s case on causation failed on appeal.

22.17 Similarly, in ASIC v Richards, the Full Court overturned a settlement approval on the basis that a ‘funders’ premium’ unfairly differentiated between different classes of group members who had identical claims. The Full Court described the settlement in the following way (at 45): The claims made by all group members against MBL were relevantly identical. Notwithstanding that there was no difference between the merits of the claims of the Funding Group Members and the merits of the Unrepresented Group Members, there was a large disparity in outcome. The Funding Group Members were to receive approximately 42% of the quantum of their claimed and lost equity contributions. The balance of the group, about 733 group members, were to recover only 17.6% of their claims to lost equity. The sole reason for that disparity was the proposed payment of the ‘Funders’ Premium’.

[page 312] The Full Court concluded that the arrangement was not fair and reasonable to all group members: at [55].

Group Member Objections

22.18 Group members will be given an opportunity to object to the settlement. It is a matter which must be addressed in the notice to group members of the proposed settlement. In Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd at [4], Emmett J stated: Where some group members object to a settlement or compromise and state their reasons for doing so, it is appropriate for the court to have regard to those reasons as a point of reference by which to determine matters of fairness and reasonableness.

The lack of objections by group members has been seen as a sign that a settlement is not opposed and is a factor in favour of the settlement being fair and reasonable: Clime Capital Ltd v Credit Corp Group Ltd (No 3) [2012] FCA 218 at [23] (‘Another matter of significance is the absence of any objection to the proposed settlement agreement from any group members. The authorities make it clear that this is a factor which should be given considerable weight’). However, some care needs to be taken in relying on a lack of objection. In P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4), Finkelstein J observed (at [23]): … it is dangerous to assume that silence equals assent as class members with only a very small stake in the action have little incentive to object … Here, however, a large number of class members (and in terms of the dollar value of their claims they represent around 99%) are institutional investors. Most, if not all, have in-house legal departments. In any event they are experienced investors. They, more than most, are able to assess the benefits of the settlement. If any of them were unhappy with the proposal I am sure they would have come forward.

Court-appointed Contradictors 22.19 A useful protection for group members is a court-appointed guardian or contradictor: Michael Legg, ‘Class Action Settlements in Australia — The Need for Greater Scrutiny’ (2014) 38(2) Melbourne University Law Review 590. In both the GIO and Aristocrat shareholder class actions, a ‘contradictor’ was appointed to represent the putative group members who sought to be included in the settlement but had failed to return a necessary form by the specified date. The contradictor was thought necessary because the lawyers for the applicant and group members were arguing against inclusion. The contradictor was a senior barrister who was

paid by the lawyers for the applicants. See King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 1420 at [15]; Dorajay Pty Ltd v Aristocrat Leisure Ltd [2008] FCA 1311 at [11]. In the Storm Financial class action against Macquarie [page 313] Bank, settlement was challenged, successfully on appeal, by the Australian Securities and Investments Commission (ASIC), which intervened in the proceedings to object to the payment of a 35% uplift to group members who had made a contribution to legal costs. Although 28 notices of objection to the settlement were filed by group members it was only ASIC that appeared at the hearing and made submissions explaining the objections to the settlement: Australian Securities and Investments Commission v Richards [2013] FCAFC 89. In the Willmott class action, Murphy J appointed a senior counsel from the Victorian Bar because the settlements fell outside the pleaded case and there needed to be representation of the interests of nonclient class members. The contradictor was provided with all necessary information, including confidential information, and the court directed that the cost of the contradictor be shared between the parties: Kelly v Willmott Forests Ltd (in liq) (No 4) at [4]. See also Kamasaee v Commonwealth at [18] and [22].

Approval of Legal Fees 22.20 A settlement will usually include the payment of the legal costs incurred by the applicant. The Federal Court, as a superior court, possesses a general jurisdiction in respect of costs and disbursements claimed by an attorney or solicitor from a client: Woolf v Snipe (1933) 48 CLR 677 at 678– 9. In a representative proceeding, s 33ZF has also been interpreted as allowing for the supervision of costs agreements with lawyers: see Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167 at [35]–[37] and Chapter 32.

22.21 It has become common practice to supply an affidavit from an independent costs expert who is able to opine as to the reasonableness of the costs and disbursements incurred by the lawyers for the applicant: see Williams v FAI Home Security Pty Ltd (No 5) [2001] FCA 399 at [19]; King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 980 at [15]; Guglielmin v Trescowthick (No 5) [2006] FCA 1385 at [16]; Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd at [129]–[130]; Taylor v Telstra Corporation Ltd at [72]; Collin v Aspen Pharmacare Australia Pty Ltd [2013] FCA 1336. In Modtech, Gordon J was not satisfied by the evidence of the independent costs consultant and appointed a registrar of the court to assess the legal fees and disbursements claimed by Slater & Gordon: see Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [53] and the subsequent decision Modtech Engineering Pty Ltd v GPT Management Holdings Ltd (No 2) [2013] FCA 1163. See Chapter 32.

Payments to Representative Parties 22.22 Representative parties and nominated group members have sought reimbursement and/or out-of-pocket expenses for the time expended providing instructions, monitoring the litigation and in the preparation of the evidence in the case in the interests of group members as a whole. [page 314] Courts have been prepared to order that such payments be paid from a settlement prior to calculating the amounts to be distributed to group members: see Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) at [74]–[93]; Jarra Creek Central Packaging Shed Pty Ltd v Amcor at [143]–[152]; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626; and Modtech Engineering Pty Ltd v GPT Management Holdings Ltd (No 2) [2013] FCA 1163 (a claim for $53,530.85 was reduced to $10,000); Lee v Bank of Queensland Ltd [2014] FCA 1376 at [55]; City of Swan v McGraw-Hill Companies, Inc [2016] FCA 343 at [31]. For an empirical study of the

amounts paid, see Vince Morabito, ‘An Empirical and Comparative Study of Reimbursement Payments to Australia’s Class Representatives and Active Class Members’ (2014) 33 Civil Justice Quarterly 175. 22.23 In Darwalla, despite approving a payment to the representative party, Jessup J expressed a number of reservations in doing so (at [75]): First, although the claimants are not fiduciaries apropos the generality of group members, they have chosen to remunerate themselves, albeit modestly, ahead of the distribution to group members of a sum which has been calculated by reference to the estimated loss and damage suffered by the latter. The sensitivity of the position in which the claimants find themselves in these circumstances is obvious. Secondly, although courts have longestablished procedures, and scales, by reference to which to assess the propriety and quantification of parties’ claims to be compensated for the legal costs and expenses made necessary by successful litigation, the same cannot be said of the payments with which I am presently concerned. I am denied the advantage of court scales and taxation procedures. I have only the claimants’ own evidence on the matter of the reasonableness of the payments, and of the necessity for the work and outlays to which they relate. Thirdly, the court is denied the benefit of the contribution of a contradictor in relation to these payments. Although the same may be said of the settlement distribution scheme as a whole, the problem is particularly acute where the court has only the say-so of those who claim these benefits with respect, for example, to the time occupied on the work to which their claims relate and the hourly rates by reference to which particular categories of personnel should be compensated.

His Honour expressed the view that a distinction needed to be drawn between ‘expenditure which related to the organisation and preparation of the claimants’ own cases, on the one hand, and time and expenditure which had a truly representative purpose, on the other hand’. It was only ‘expenditure of the latter category for which a reasonable case for compensation or reimbursement out of the corpus of the settlement sum might reasonably be made’: at [81]. The validity of the reimbursement of applicants and nominated group members turns on the representative nature of class actions, creating an exception to the usual rule that parties are not to receive payment for their time conducting litigation. [page 315]

More recently, a debate has commenced as to whether payments to representative parties may be used as an incentive for them to take on the role. In Downie v Spiral Foods Pty Ltd [2015] VSC 190, Forrest J approved a settlement that included a payment to the representative party of $13,470.46 for time and expense incurred: at [175]. However, his Honour said in obiter at [171] that: ‘The compensation is for time actually input; it is not an “incentive payment” for taking on the role of lead plaintiff as has been adopted in the US class action’. In Farey v National Australia Bank Ltd [2016] FCA 340, Beach J approved a settlement which, pursuant to ss 33V(2) and 33ZF, compensated the two applicants for their time spent in their role as lead applicants in the proceeding in the order of $2000: at [41]. His Honour said in obiter (at [43]): There is adequate statutory power (ss 33V(2) and 33ZF(1)) to approve incentive reward payments and their deduction from the settlement proceeds. But if such incentive mechanisms are to be invoked, in the usual case they should be approved at least in a preliminary or contingent way (subject to further order) at or close to the inception of the proceedings and then unconditionally approved (if appropriate) in the subsequent formal s 33V process. Of course, where there is an external litigation funder who has taken on the costs risk, including any exposure to an adverse costs order, it may be difficult to see how any such incentivisation award could ever be justified in addition to reasonably remunerating the applicant for the time spent in pursuing the proceeding for the benefit of the group members and any out of pocket expenses. I do not need to discuss the position where the applicant is a funder. Interestingly, and finally on this point, I note that Professor Morabito has reported on statistics that in one sense might seem to be counterintuitive. The Australian mean and median awards per class representative based upon a ‘restitution-only’ approach have been substantially greater than the US awards that have been based upon the ‘reward/incentive’ philosophy.

Payments to Litigation Funders 22.24 The payments to litigation funders can consume a large proportion of any class action settlement. However, the ability to supervise or alter contractual relations involving a litigation funder is less clear compared to the position of lawyers as the funder is not an officer of the court and the fee arrangements are not amenable to the court’s taxation of costs process. However, the courts have begun using s 33ZF (see Chapter 32) and s 33V(2) (see below) to oversee and reduce litigation funders’ fees.

Payment to Funding Group Members

22.25 In Australian Securities and Investments Commission v Richards [2013] FCAFC 89, the Full Federal Court considered a settlement in which group members who had funded the proceedings would receive approximately 42% of the quantum of their alleged losses and be reimbursed their legal costs while the [page 316] balance of the group would only recover 17.6% of their claimed loss. The funding group members were represented by Levitt Robinson solicitors, while the unrepresented group members were not. The difference in the amounts payable to the funding group members and the other group members was said to arise by the payment to the funding group members of a ‘funders’ premium’ of $28.875 million, or 35% of the settlement pool. The Federal Court initially approved the settlement, but that was overturned by the Full Federal Court. The court observed: (a) ‘the claims made by all group members against MBL were relevantly identical’: at [45]; (b) ‘the prospect of the funding group members claiming, or seeking, any premium for funding the litigation (let alone a 35% premium) was not mentioned directly or indirectly until at least two years after the litigation had commenced’: at [46]; (c) ‘unlike a commercial litigation funder, the funding group members funded the litigation in the hope, but without any expectation, that they would receive full reimbursement of their funding contributions and without any expectation that they would receive a premium. That is, the funding group members made a decision to fund the litigation on certain terms and conditions — terms and conditions that did not contemplate any premium. Likewise, the other group members were not aware of the prospect of a premium being paid to those who decided to fund the litigation because a premium had not been contemplated’: at [48];

(d) ‘the financial effect of the payment of the funding premium to funding group members was disproportionate’: at [49]; (e) the funders’ premium was payable to the funding group members who were defined as ‘group members who were clients of Levitt Robinson as at 15 March 2013 who contribute to the funding of the Class Action up to the date of the Approval’. That included any group member who was a client of Levitt Robinson who made a contribution of at least $500 so long as they were a client of Levitt Robinson prior to the date the settlement was approved. None of the other group members who were not clients of Levitt Robinson were afforded the same opportunity to participate at such a late stage for as little as $500: at [51]; (f) another difficulty with the funders’ premium was its quantum. There was no rational explanation for rewarding the funding group members by paying them a premium on an amount inclusive of interest and costs by a method which does not mathematically correlate with the amount they paid to fund the litigation. A further difficulty with the quantum of the premium was that it was obtained by reference to the premiums charged by commercial litigation funders. That was inappropriate because unlike commercial litigation funders, the funding group members were not in the business of funding litigation to make a profit: at [52]. [page 317] The Full Court did not approve the settlement, but noted (at [53]): That finding should not be taken as precluding the possibility that group members or a sector of group members might decide from the outset to fund litigation on certain terms and conditions. The terms and conditions may be agreed from the outset and, for example, could include the prospect of a premium in the form of interest at penalty bank interest rate on the actual funds contributed to fund the litigation. That is compensation for the time they stand out of their money and the risk involved. The court accepts that this form of litigation funding is an important alternative to commercial litigation funders and should, to the extent possible, be encouraged. However, from the outset it must be established and managed fairly to those who decide to fund the litigation and those who, for whatever reason, choose not to.

Settlement Approval Hearing 22.26 There will be a settlement hearing for the judge to consider the evidence in relation to s 33V and to determine if the orders sought should be made. If the settlement is approved there will follow various steps to administer the settlement, including identifying the group members, if this has not previously occurred, calculating each group member’s claim and distributing payments.

Class Closure 22.27 Closure of the class, as distinct from ‘closed classes’ (discussed in relation to s 33H in Chapter 9) is an important step in the settlement process. First, it is important that the group members that are to be bound by the settlement are either identified before the court is asked to approve the settlement, or a process is put in place to ensure that they will be identified. Second, respondents will often seek a mechanism which ensures that the settlement of the representative proceeding provides as much finality as possible. This includes ensuring all claimants are identified, and also limiting, as far as possible, the ability of other group members to litigate the same controversy in subsequent proceedings. Each group member must be identified and notified of the proposed settlement: see Collin v Aspen Pharmacare Australia Pty Ltd [2013] FCA 952; ss 33X(4) and 33Y. This is because, like final determination of a proceeding, settlement orders will bind each group member and extinguish their rights to pursue that claim any further: see Matthews v SPI Electricity Pty Ltd (2013) 39 VR 255 at [23]–[24] per Forrest J; s 33ZB (Chapter 28). In those circumstances, group members need to be provided with an opportunity to make an informed decision and object to the settlement or seek to opt out of the class action. 22.28 ‘Closing the class’ will often involve orders which have the effect of extinguishing the rights of any group members who do not come forward to participate in the settlement process.

[page 318] The issue of how and when class closure should occur has received considerable attention from the court. However, there are divergent views about how and when this should occur. See the discussion in relation to s 33ZF (Chapter 32).

Discontinuance 22.29 For a court to grant approval for a discontinuance, the applicant party must show that the discontinuance is in the interests of all the class members: see Mercedes Holdings Pty Ltd v Waters (2010) 77 ACSR 265; [2010] FCA 124; Bates v Dow Corning (Aust) Pty Ltd [2005] FCA 927. Section 33V, and the necessity to have the court’s approval for discontinuance, will also be enlivened in relation to amendments made to the group definition which have the effect of carving out substantive claims of groups of represented parties: see Bray v Hoffman-La Roche Ltd at [23] per Merkel J; Vlachos v Centro Properties Ltd (Federal Court of Australia, Proceeding No VID 366 of 2008 per Middleton J); see also s 33K (Chapter 11).

Releases 22.30 In a class action ‘it is not uncommon in settlements for full releases to be made of all outstanding claims, whether directly at issue in the proceedings or not. The releases are given, as Counsel for the applicant submitted, as the price of finality’: Harrison v Sandhurst Trustees Ltd [2011] FCA 541 at [26]; see also Tongue v Council of the City of Tamworth [2004] FCA 209 at [45]; Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51 at [57]. 22.31 In Farey v National Australia Bank Ltd [2016] FCA 340, Beach J opined (at [44]–[49]): An order that has been sought relates to the authority of the applicants to enter into and bind group members in respect of inter alia releases given in favour of the NAB and related

entities that in one sense may be perceived to be broader than the claims made in the proceeding. First, in my view I have clear statutory power to make such an order. Sections 33ZF and 33Z(1)(g) are sufficiently broad. Moreover, in terms of s 33ZB, any order made under s 33Z(1)(g) can bind accordingly. Such powers are not limited to the pleaded claims. Second, there is little doubting the statutory authority of an applicant in a representative capacity under Part IVA taking action which binds group members. If it be accepted that an applicant has statutory authority on behalf of group members to negotiate and enter into a settlement agreement subject to Court approval, then it seems to me that such an applicant has implied statutory authority to negotiate and agree to ancillary and reasonably tailored and proportionate terms and conditions, such as broader releases, to achieve the primary aim.

[page 319] Third, there may be doubt as to how far any such releases could extend beyond the pleaded case but still be within such authority. But there are several practical answers that can be given. If the releases deal with non-pleaded claims which if brought within separate later proceedings could be the subject of an issue estoppel or Anshun estoppel if the first proceeding had been litigated to judgment, then there would be such authority. It would be counterintuitive to suggest otherwise. Not to permit of the authority to give such a broader release would condone of a situation (the bringing of a later proceeding) which by definition would be an exercise in futility. But more fundamentally, if an applicant had authority to apply to amend the proceeding to bring such a new claim on behalf of group members, why wouldn’t the applicant have the authority to release the new claim without going through unnecessary formalities in the context of a s 33V process? Fourth, in those cases (not the present) where a group member has opted in to or registered in respect of a settlement (or at the least has chosen not to opt out) with notice of its terms including broader releases, such conduct in a particular case may separately constitute implied authority. But that is not the present case given the effect of the orders made on 18 November 2014. Fifth, if there is a doubt or authority needs to be extended beyond any express or implied statutory authority, the statutory powers referred to above (see at [45]) can be exercised. Having viewed the settlement deed and the releases in the present case, I am satisfied that I should make the order sought on this aspect.

22.32 The above expansive views must be contrasted with Kelly v Willmott Forests Ltd (in liq) (No 4), where ‘binding loan admissions’ that dealt with individual claims by class members were not approved, despite similar admissions having been approved in Clarke v Great Southern Finance Pty Ltd

(recs & mgrs apptd) (in liq) [2014] VSC 516. Murphy J observed (at [208]– [209]): … it is common ground that a judgment or settlement of the class actions will bind class members to an estoppel in respect of the common claims which are pleaded in the actions. It is also common ground, at least between the Contradictor and the settlement parties, that a judgement or settlement may bind class members to an estoppel in respect of common claims that could have been pleaded in the class actions but were not. … in the present circumstances, class members are unlikely to be estopped in relation to any individual or unique claims they possess.

22.33 The scope of the representative party’s authority to represent and bind group members through releases given on their behalf requires consideration of a number of different claims. The first and most obvious is in relation to the common issues pleaded in a class action. The second is the non-common issues associated with the common issues that are pleaded in the class action (for example, causation and damages). The third is common claims that are not pleaded in the class action but could have been included consistent with the class action requirements. The fourth is individual claims that are separate from the claims [page 320] being pursued in the class action and could not be included consistent with the class action requirements. In Timbercorp Finance Ltd (in liq) v Collins (2016) 339 ALR 11 at [53], French CJ, Kiefel, Keane and Nettle JJ in the context of a class action where there was a judgment on the common issues in favour of a defendant, held that a representative party in a class action ‘represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims’. In short, group members are bound by judgment on the common issues. Further, Anshun estoppel could not extend to claims in the fourth category: Timbercorp Finance Ltd (in liq) v Collins at [58]. However, settlements frequently include categories one and two, and may even extend to category three depending on the breadth of the wording of releases. While category two is not part of, or resolved by a judgment on the common issues, it is inextricably part of a

group members cause of action and needs to be included in any settlement to achieve finality. The courts have indicated that the representative party does have authority to bind group members in relation to category three in a settlement: Farey v National Australia Bank Ltd at [47]. The permissible scope of a release would seem to turn on which category of claim is involved.

Section 33V(2) — Distribution of Money 22.34 Section 33V(2) provides that the court ‘may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court’. In the event that the court does not consider that the distribution of a settlement sum is fair and reasonable, it has the power to direct modifications to how the settlement sum is to be distributed. In Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626, Gordon J considered the distribution of a settlement amount pursuant to a settlement distribution scheme. In that case, Gordon J directed that the parties amend the settlement distribution scheme to address a number of deficiencies identified by her Honour: see, for example, [56]–[61]. After the settlement distribution scheme was amended, orders were made approving the settlement. 22.35 Section 33V(2) has also been employed to allow for a common fund order in relation to litigation funding fees, and in particular to reduce the fee paid to a funder. In Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (No 3) [2017] FCA 330 at [101], Beach J stated: I consider that as part of any approval order under s 33V, I have power in effect to modify any contractual bargain dealing with the funding commission payable out of any settlement proceeds. It may not be a power to expressly vary a funding agreement as such. Rather, it is an exercise of power under s 33V(2); for present purposes it is not necessary to invoke s 33ZF. I am empowered to make ‘such orders as are just with respect to the distribution of any money paid under a settlement’. If I make an order that out of monies paid by a respondent, a lesser percentage than that set out in a funding agreement is to be paid to

[page 321]

a funder, that is an exercise of statutory power which overrides the otherwise contractual entitlement. That is not an unusual scenario in many and varying contexts. It might also be said that the funding agreement itself contains an implied term reflecting this override in any event; the parties would be contracting in the known setting that the funder’s percentage commission entitlement would only operate on a settlement sum if the necessary condition of Court approval had first been given.

In Mitic v OZ Minerals Ltd (No 2) [2017] FCA 409, the power to use s 33V(2) was endorsed by Middleton J and also recognised in HFPS Pty Ltd (Trustee) v Tamaya Resources Ltd (in liq) (No 3) [2017] FCA 650 at [105]. See also Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 at [134], and the argument against using s 33V(2) advanced at [127]. See also the discussion in Chapter 32 regarding common fund orders, and litigation funding fee management.

Settlement Distribution Schemes 22.36 It has been recognised in Australian class actions that fairness and reasonableness of a settlement requires consideration of not just the overall settlement sum ‘but also the structure and workings of the scheme by which that sum is proposed to be distributed among group members’: Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) at [41]. In Camilleri v The Trust Company (Nominees) Ltd at [5], Moshinsky J explained that settlement approval required consideration of the settlement inter partes and inter se. The latter focused on the sharing of compensation among claimants and the need to ‘achieve a broadly fair division of the proceeds, treating like group members alike, as cost-effectively as possible’. The Class Actions Practice Note (GPN-CA), 25 October 2016, raises for consideration by the court, and requires information from the parties, as to how and when a settlement will be distributed. Paragraph 14.5 states: To the extent relevant, the affidavit or affidavits in support [of the settlement] should state: … (c) the effect of [the terms of settlement] on class members (ie the quantum of damages they are to receive in exchange for ceasing to pursue their claims and whether class members are treated the same or differently and why); (d) the means of distributing settlement funds;

(e) the time at which it is anticipated settlement funds will be received by class members; (f) the frequency of any post-approval report(s) to be provided to the Court regarding the distribution of settlement funds; …

[page 322] Paragraph 14.6 adds: The Court will require to be advised at regular intervals of the performance of the settlement (including any steps in the settlement distribution scheme) and the costs incurred in administering the settlement in order that it may be satisfied that distribution of settlement monies to the applicant and class members occurs as efficiently and expeditiously as practicable.

Settlement distribution schemes have two competing objectives: (1) individual compensation reflects the merits of each individual claim; and (2) the distribution process is completed in a manner that minimises cost and delay: Michael Legg, ‘Class Action Settlement Distribution in Australia: Compensation on the Merits or Rough Justice?’ (2016) 16 Macquarie Law Journal 89. In Camilleri v The Trust Company (Nominees) Ltd, Moshinsky J set out a number of factors relevant to the assessment whether a proposed distribution scheme is fair and reasonable, including ‘whether the assessment methodology, … is consistent with the case that was to be advanced at trial and supportable as a matter of legal principle’: at [43]. The distribution scheme under consideration was found to have been ‘constructed to “proxy” the kinds of damages-assessment principles which the applicants’ representatives expect would in substance be adopted at trial’: at [47]. Another relevant factor in determining if a settlement should be approved is ‘whether the costs of a more perfect assessment procedure would erode the notional benefit of a more exact distribution’: at [43]. Similarly, the Supreme Court of Victoria in A v Schulberg (No 2) [2014] VSC 258 at [12], has stated that in assessing the fairness of a settlement: ‘it is necessary to form a view as to the correlation between the amount individual group members will recover under the settlement distribution scheme and the amount they might recover after a trial, necessarily any such comparison can only be performed in a broad manner’. Further, in Matthews v AusNet

Electricity Services Pty Ltd [2014] VSC 663 at [420], Osborn JA commented: ‘the potential claims are so heterogeneous that unless some simplified scheme of assessment is provided, the process of assessment of damages will be impractically costly, contentious and delayed’. The above objectives are competing because the more accurate a settlement distribution scheme seeks to be, the greater the cost and delay in administering the settlement. Equally, a scheme cannot simply allocate funds without consideration of differences in the claims subject to the scheme, including prospects of success: Peterson v Merck Sharp and Dohme (Aust) Pty Ltd (No 6) [2013] FCA 447. Further, if there is an internal differentiation in the settlement scheme, then that differentiation must reflect substantive differences in the claims such as the strength of the claim, and not be arbitrary: Downie v Spiral Foods Pty Ltd at [53]. This approach may be put another way: the distribution of settlements should seek to achieve ‘vertical equity’ (that more deserving claimants receive more than less deserving claimants) and ‘horizontal equity’ (that similarly situated claimants receive similar awards). [page 323] Examples of the workings of settlement distribution schemes are set out in Rebecca Gilsenan and Michael Legg, ‘Australian Class Action Settlement Distribution Scheme Design’, IMF Bentham Class Action Research Initiative Research Report No 1, 1 June 2017. Shareholder and cartel class action settlements typically utilise a global sum/formula based settlement distribution scheme. The global sum means that the class action is settled for a specific amount so that the amount available for distribution is capped at that amount, albeit with any interest earned also being available for distribution. The reference to a formula follows from the use of a loss assessment formula that is developed using econometric modelling. The sophistication of the model will vary. In mass tort class actions, such as product liability or environmental claims, typically the global sum is divided amongst group members by the scheme administrator. The division is achieved through assessing each group

member’s claim and paying them a proportion of their claim reduced to the same degree by which the global settlement sum is lower than the full recovery that might have been achieved at trial. The individual assessment requires the claimant to provide information about their injury and/or loss to which the scheme administrator or someone appointed by the scheme administrator then applies the relevant law. The process may be illustrated through the Kilmore-East Kinglake bushfire class action, which included 1481 personal injury and dependency (I-D) claims and 9174 economic loss and property damage (ELPD) claims. The settlement sum of $494,666,667 was paid into two separate funds, one for I-D claims and the other for ELPD claims. For I-D claims, the assessment involved determining the usual heads of damages for personal injury, namely pecuniary loss resulting from lost capacities (for example, lost earning capacity and loss of domestic capacity), pecuniary loss resulting from special needs (for example, medical expenses and the cost of care) and non-pecuniary loss (for example, pain and suffering, loss of amenities of life and loss of expectation of life). Further, Wrongs Act 1958 (Vic) Pt VBA requires a claimant to have suffered a ‘significant injury’ (defined as above 5% impairment for physical injuries, or above 10% for psychiatric injuries) as a precondition to entitlement for damages for pain and suffering. The ELPD assessment process involved claims being evaluated in accordance with Assessment Principles comprised of more than 40 discrete loss categories including homes, non-home buildings, fences, gardens and trees, home contents and chattels, livestock, and labour costs. For each loss, item or category, a narrative rule defined the basis on which the value of the loss was to be assessed. Claims were then subject to ELPD Multipliers which were further adjustments to reflect the risks or prospects of success applicable to certain types of claim that the loss would not be recovered if the relevant claim went to judgment.

Sample Settlement Approvals 22.37 The table below provides a summary of some of the court-approved settlements of representative proceedings.

[page 324]

[page 325]

[page 326]

[page 327]

[page 328]

• CASE LAW • 22.38

Australian Securities and Investments Commission v Richards [2013] FCAFC 89 (Jacobson, Middleton and Gordon JJ)

The primary judge (Logan J) made orders pursuant to ss 33V and 33ZF approving the settlement of the representative proceedings brought by the applicant against the respondents. The settlement provided for the distribution of $82.5 million (inclusive of interest and costs) (settlement pool) between approximately 1050 group members. Although not a party to the original proceedings, the Australian Securities and Investments Commission (ASIC) (in its capacity as the regulator) appealed the decision at first instance. The issue that arose on appeal was whether the distribution between the group members was fair and reasonable. Under the settlement, about 317 group members would receive approximately 42% of the quantum of their claimed lost equity contributions and be reimbursed their legal costs (funding group members). The funding group members were all represented by the applicant’s solicitors and had contributed varying amounts to funding the class action. The balance of the group, about 733 group members, were to recover 17.6% of their claims to lost equity (unrepresented group members). The unrepresented group members were not represented by the applicant’s solicitors. The difference between the amounts payable to the funding group members and the unrepresented group members was because the funding group members were to be paid a ‘funders’ premium’ of $28.875 million (35% of the settlement pool) (funders’ premium). 22.39 The court upheld the appeal, finding that the distribution of the settlement sum as between all group members was not fair and reasonable for the following reasons:

The distribution was unfair because there was an inequality of opportunity afforded to the group members to share in the funders’ premium on the terms offered to clients of the applicant’s solicitor. This inequality was heightened by an ex post facto offer of highly attractive terms to a small group of the applicant’s solicitors’ clients after the settlement was announced. The court found that the ‘terms of the distribution of the Settlement Pool should not prejudice the Unrepresented Group Members for having made an informed decision on one basis which the Funding Group Members [sought] to change to their advantage but to the disadvantage of the Unrepresented Group Members’: at [42], [46]–[47], [51]. The calculation of the premium by reference to the success fees obtained by commercial litigation funders was unfair. Unlike commercial litigation funding, the funding group members funded the litigation without any expectation that they would receive a premium. Similarly, the unrepresented group members were not aware of the prospect of a premium being paid to [page 329] those who decided to fund the litigation because a premium had not been contemplated: at [43], [48]. The funders’ premium would have had the financial effect that the funding group members would have received a disproportionate amount of the settlement amount. For example, the funding group members would have had all of the costs they had paid to fund the litigation reimbursed and then would have received an additional payment for taking part in funding the litigation (characterised as an ‘investment’ by the applicant’s solicitors): at [49]–[50]. There was no rational explanation provided, nor was there appropriate evidence adduced to demonstrate the reason, for the quantum of the funders’ premium (that is, 35% of the settlement pool): at [52]–[53].

22.40

Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250; (1996) 142 ALR 177 (Branson J)

On 24 April 1996, the Australian Competition and Consumer Commission (ACCC) (applicant) filed an originating application and statement of claim for injunctive relief and damages against Chats House Investments Pty Ltd (Chats House) and three other respondents for alleged fraud under Federal Court of Australia Act 1976 (Cth) Pt IVA and Trade Practices Act 1974 (Cth) (Trade Practices Act) s 87(1B). The ACCC filed on behalf of former clients of Chats House, an investment company which received a total $822,803.84 to invest in foreign exchange trading. This did not occur, yet Chats House charged its clients under the guise of interest and margin call payments. The other three respondents were individuals recruited by Chats House to act as ‘brokers’ in the fraudulent upkeep of Chats House’s ‘charade’. Branson J held that court approval under s 33V was not only required for complete settlement of proceedings, but also for ‘settlement of claims against a joint-respondent, or settlement of any substantive claim against a respondent’. The section applies to a settlement in full, against any respondent, or in relation to any single substantive claim: at 258. The purpose of s 33V is to ensure that the court is satisfied that any settlement or discontinuance of representative proceedings has been undertaken in the interests of the group of members as a whole and not just in the interests of the applicant and respondent: at 184.

22.41

Courtney v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 (Sackville J)

The Courtney v Medtel Pty Ltd class action proceedings arose out of a hazard alert issued by the Therapeutic Goods Administration on 5 June 2000. The hazard alert related to a particular batch of St Jude Teletronic Tempo Pacemakers (pacemakers) manufactured between March 1997 and December 1998.

[page 330] The statement of claim described the pacemaker as (at [5]): … a cardiac device manufactured and used for the particular purpose of being surgically implanted on the advice of doctors inside the human body attached to the heart so as to restore and maintain a normal heart beat by providing an electrical impulse or energy or beat that is carried through leads to the heart. The Pacemaker is triggered by an irregular pulse in the user to send a series of light electric pulses activating a regular heart beat.

22.42 The hazard alert was issued due to an increased risk that the pacemakers would experience ‘early battery depletion and resulting no output conditions’. The alert affected some 1048 persons who had had a pacemaker implanted in Australia. The doctors treating these patients were advised to review each patient and evaluate the functioning of his or her pacemaker. Consideration was to be given to the removal (explanation) and replacement of the pacemaker, both for patients who were considered pacemaker dependent and for those who were not. The applicant alleged that the pacemakers had a fault, namely that they (at [5]): … were prone to a circuitry problem, resulting or likely to result in accelerated battery depletion and consequential failure of the device, whereby the Pacemaker may cease to function without any prior warning or indication.

The applicant pleaded that the pacemaker was not reasonably fit for its purpose under Trade Practices Act s 74B and had a ‘defect’ which caused injury to the applicant and group members under Trade Practices Act s 75AD. Each of the respondents was said to have engaged in misleading and deceptive conduct in contravention of Trade Practices Act s 52. They were also said to have breached a duty of care owed by them to the applicant and the group members. The applicant sought declaratory relief, compensation pursuant to Trade Practices Act ss 74B and 75AD and damages under Trade Practices Act s 82 and under the general law. 22.43 Only a relatively small proportion of the Hazard Alert Pacemakers had failed or did fail, in the sense that they had experienced or did experience accelerated battery depletion leading to premature loss of

function. The difficulty presented by the case was that, unless an implanted pacemaker had already ceased to function or shown signs of malfunction while in the patient’s body, it was not possible to ascertain whether it would actually lose function prematurely until it was explanted and tested outside the patient’s body. The court found that nearly all the pacemakers were manufactured using a particular solder, known as ‘yellow spool solder’. While pacemakers generally can never be guaranteed to be completely free of the possibility of malfunction, it was the use of that solder that created a superadded risk that the pacemakers would fail prematurely. This is because the yellow spool solder created conditions conducive to dendritic growth which, in turn, would lead to partial short circuits and premature depletion of the pacemaker’s battery. [page 331] 22.44

The applicant sought orders including:

(a) requiring the respondents to notify the applicant of the terms of any offer of settlement that the respondents propose to make to the applicant and/or group members; (b) allowing the applicant to recommend acceptance or rejection of the respondents’ offer; and (c) in the event of a recommendation of rejection, for the parties to attend mediation. As Sackville J observed, the above order sought (at [3]): … in effect, prevents the Respondents putting any settlement offer to group members without the approval of [the solicitors for the applicant], at least until agreement is reached as to the terms of an offer or a mediation takes place … If my understanding is correct, par 3 of the motion [the order] would give MBC [the solicitors for the applicant] a right of veto over the submission of any offer by the respondents to the group members not represented by MBC [the solicitors for the applicant].

22.45

The respondents had indicated their intention to communicate

offers of settlement to a sub-class of the group members. This sub-class formed approximately half of the group members. In the case of the members of the sub-class who were represented by the solicitors for the applicant, the respondents proposed to communicate the offer of settlement to the solicitors for the applicant. In the case of those members of the sub-class who were not represented by the solicitors for the applicant, the respondents proposed to communicate the offer of settlement in writing directly to the individuals. The applicant had argued that s 33V was broad enough to require court approval for a settlement between a respondent and an individual remaining group member. Sackville J referred to the judgments of Branson J in Australian Competition and Consumer Commission v Chats House Investments Pty Ltd and Moore J in King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 872 and continued (at [45]): It is difficult to apply the language of s 33V(1) to the settlement of some individual claims of group members, at least where the settlement does not entirely resolve one category of claims comprehended by s 33C. Moreover, the legislative history of Pt IVA tells against the suggestion that s 33V(1) is intended to apply to the settlement of the claims of individual group members without the involvement of the applicant. That suggestion is also difficult to reconcile with the specific requirement in s 33W, that a representative party requires the leave of the Court to settle his or her individual claims. Had Parliament intended the same requirement to apply to settlement of the individual claims of group members, it might have been expected to say so.

[page 332] In any event, it was not necessary for Sackville J to determine the question, as even if all the members of the sub-class had accepted offers of settlement, this would not have effectively disposed of the proceedings.

22.46 Darwalla Milling Co Pty Ltd v F Hoffman-La Roche (No 2) (2006) 236 ALR 322; (2007) ATPR 42-134; [2006] FCA 1388 (Jessup J) Proceedings

were

brought

against

three

large

European

vitamin

manufacturers who produced certain vitamins used in the production of animal feed and animal feed supplements. The applicants, who ranged from purchasers to distributors and suppliers of products containing the class vitamins, alleged that the vitamin manufacturers had engaged in forming a price fixing cartel. It was alleged that the manufacturers had sought to maintain agreed market shares with respect to the class vitamins, to adhere to agreed prices and to supply the class vitamins in volumes that were agreed between them: at [10]. If proven, this would have been in contravention of Trade Practices Act 1974 (Cth) s 45(2). A settlement was finalised by the applicants on 10 July 2006 and brought before the court for approval as required under s 33V. 22.47 Jessup J found (at [50]) that it is not the court’s function under s 33V to ‘second-guess the applicants’ advisers as to whether the applicants ought to have accepted the respondents’ offer’. So long as the agreed settlement falls ‘within the range of fair and reasonable outcomes’, it should receive the court’s approval: at [43]. Jessup J noted that there will rarely be a circumstance in which there is a unique outcome which should be regarded as the only fair and reasonable one. His Honour observed that some parties and advisers tend to be more risk-averse than others, and the court should, up to a point, ‘take the applicants and their advisers as it finds them’: at [50]. Neither the court nor the applicants knew what the final amount was that each group member would be entitled to in the settlement. However, Jessup J was satisfied the settlement sum was fair and reasonable based on the advice the applicants had received from counsel, solicitors and experts. As for the settlement scheme which would govern the distribution of the settlement sum between group members, Jessup J conceded there was ‘no way of knowing how close to reality are the rules of thumb and assumptions’ used in formulating the distribution formula: at [64]. His Honour nonetheless held that he was in no position to second guess the allowance and found it to be fair and reasonable. More broadly, Jessup J observed that an approach which identifies features of a settlement that are obviously unreasonable or unfair is an easier approach in determining whether a settlement is ‘fair’ and ‘reasonable’ than

assessing the reasonableness and fairness of a settlement in an ‘environment generally devoid of negative indications’: at [39]. [page 333]

22.48

Dorajay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 (Stone J)

The proceedings were brought on behalf of investors (the applicants) who acquired shares in Aristocrat Leisure Ltd (the respondent) between 19 February 2002 and 26 May 2003. The applicants alleged that the respondent made certain profitability representations that were misleading or deceptive, or likely to mislead or deceive, in breach of Corporations Act 2001 (Cth) s 1041H(1), Australian Securities and Investments Commission Act 2001 (Cth) s 12DA(1), or Trade Practices Act 1974 (Cth) s 51. The applicants also alleged that the respondent was in breach of the continuous disclosure obligation imposed by Corporations Act s 674. The proceeding originally involved a ‘closed class’ in which, in order to be a member of the class, a person was required to instruct Maurice Blackburn Cashman (MBC) (the MBC criterion). It was a condition of entering into a retainer agreement with MBC that the prospective class member also enter into a funding agreement with Insolvency Litigation Fund Pty Ltd (ILF), a wholly owned subsidiary of IMF (Australia) Ltd (IMF). 22.49 In Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394, it was held that such a condition, in effect, required group members to ‘opt in’ to the proceeding and, as such, it was inappropriate that the proceeding continue under Pt IVA. Following this, the applicants amended the group definition to describe an ‘open class’, so that the proceeding was continued on behalf of all shareholders who acquired an interest in the respondent during the relevant period. After the trial, but before judgment was delivered, the parties agreed to an

in principle settlement of (at [12]): (a) $109 million in respect of the claims of funded group members, with Aristocrat retaining no right or interest to any part of that money after distribution to group members; and (b) $27 million in respect of the claims of non-funded group members, with any balance outstanding after distribution to be refunded to Aristocrat. 22.50 The distribution scheme included a ‘Loss Assessment Formula’ for the calculation of each participating group member’s entitlement: at [13]. The mechanics of the distribution process were (at [20]): (i)

Maurice Blackburn will be appointed as Administrator of this Scheme;

(ii)

Participating Group Members will submit to Maurice Blackburn Proofs containing the Objective Data pursuant to Orders of the Court;

(iii)

Maurice Blackburn will construct a database collating the information submitted by Participating Group Members in their Proofs and upon

[page 334] which their claims to a distribution out of the Aristocrat Settlement Distribution Fund will be calculated; (iv)

Maurice Blackburn will notify each Participating Group Member of the information which pertains to them in a Notice of Claim Data and give them an opportunity to notify any objections to it;

(v)

following the resolution of any objections to the Notice of Claim Data Maurice Blackburn will finalise the database and use it to calculate the entitlement of each Participating Group Member to a distribution out of the Aristocrat Settlement Distribution Fund;

(vi)

Maurice Blackburn will notify each Participating Group Member of the calculations in an Assessment Notice and give them an opportunity to notify any objections to it;

(vii)

each Participating Group Member will have an opportunity to object to its Notice of Claim Data or Assessment Notice;

(viii) following resolution of any objections Maurice Blackburn will notify Aristocrat whether any part of the [non-funded group members] Fund is repayable to Aristocrat;

(ix)

interest on the Aristocrat Settlement Distribution Fund shall be applied to the extent necessary to payment of Administration Costs;

(x)

IMF will notify Maurice Blackburn of the amount of the payment which each Participating [funded group member] is required to make to it pursuant to the funding agreement between IMF and that Participating Group Member;

(xi)

Maurice Blackburn will deduct from the Aristocrat Settlement Distribution Fund any Administration Costs outstanding and then from the balance shall: (a)

distribute the [funded group members] Fund between Participating [funded group members], after paying to IMF the amounts payable out of each Participating [funded group member’s] allocation; and

(b)

distribute the [non-funded group members] Fund between Participating [nonfunded group members] (with any repayment to Aristocrat that might be required).

22.51 Before the proposed settlement could be addressed, Stone J had to consider the issue of whether the application should be heard by another judge. Her Honour was concerned that she might be embarrassed delivering judgment if the settlement did not proceed, due to her becoming aware of confidential information, such as legal advice, and the concessions that each party was prepared to make. Her Honour was concerned that this could create the perception of bias: at [4]. Stone J also considered, however, that she was in a better position to make an informed decision as to the fairness of the settlement than any other judge, as she was familiar with the applicants’ claims and the circumstances of the case, [page 335] and had heard full argument for and against the claims: at [5]. For this reason, both parties gave informed consent, waiving irrevocably any objection to Stone J’s delivering judgment after receiving confidential information: at [6]. 22.52 Having considered these issues, Stone J was satisfied that the proper course was for her to hear the application for settlement approval. The terms

of the settlement are described above, although the loss assessment formula and opinions by the applicant’s legal representatives as to the fairness and appropriateness of the settlement were kept confidential. Stone J cited Jacobson J’s survey of authorities relevant to s 33V from Taylor v Telstra Corporation at [56]–[66]. Based on these authorities, Stone J concluded that, ‘The question whether this proposed settlement is fair, reasonable and adequate in the circumstances of all group members requires three aspects of the proposed settlement to be considered’: at [11]. These were the fairness, reasonableness and adequacy of: the amount proposed to be paid by the respondent as compensation to the participating group members; the mechanics of the settlement process; and the provisions in relation to costs and administration costs. Despite the fact that there was a differentiation between funded and nonfunded group members, Stone J held that the amount proposed to be paid was fair, reasonable and adequate. This was because the funded group members undertook liability for costs of the action through the litigation funder: at [17]. Stone J was also satisfied that the mechanics of the settlement process and the provisions in relation to costs were fair, reasonable and adequate. Consequently, her Honour approved the settlement in accordance with s 33V(1).

22.53

Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 (Gordon J)

The applicant, Modtech Engineering Pty Ltd, a former holder of stapled securities in the respondent companies, commenced a representative proceeding on its own behalf and on behalf of persons who purchased GPT securities between February 2008 and July 2008 and continued to hold those securities after that date. The applicant alleged that, by reason of various

matters, a forecast issued by GPT on February 2008 overstated the distributions per security expected in 2008 and, as a result, securities purchased during the relevant period were purchased at an inflated price. When GPT issued a downgrade on 7 July 2008, its security price fell and Modtech alleged it suffered loss. A settlement was reached between the parties after judgment had been reserved in the matter. The terms of the proposed settlement were that GPT would pay a settlement sum of $75 million, inclusive of interest and legal costs. The parties to the settlement deed were Modtech, GPT, Slater & Gordon Limited and [page 336] Comprehensive Legal Funding LLC (CLF). CLF provided commercial litigation funding to Modtech for the proceeding. 22.54 There were two aspects to the proposed settlement: payment of the settlement sum and then distribution of that settlement sum pursuant to a ‘settlement distribution scheme’. Her Honour found that the settlement sum, as a compromise between group members and GPT, was fair and reasonable for group members as a whole: at [17]–[18]. However, before approving the settlement, her Honour found that there were a number of amendments that needed to be made to the settlement distribution scheme in order for the settlement to be fair and reasonable. They were as follows: Applicant’s costs: After carefully considering evidence filed by the applicant in support of the approval application (at [24]–[51]), her Honour found (at [52]): In the circumstances of this case, the court cannot approve the deduction of the Applicant’s Costs (which are in fact Slater & Gordon’s costs) from the Settlement Sum and then the payment of those costs to Slater & Gordon. Instead, the court will approve that an amount of $9,338,865.00 be deducted from the Settlement Sum …

Funding commission deduction: 92% of the group members had executed

an agreement with CLF which entitled CLF to between 25% and 30% of the net amount recovered by each of those group members. The settlement distribution scheme provided that a funding commission would be deducted from the individual entitlements of all group members and paid to CLF, irrespective of whether they had executed an agreement with the litigation funder: see [55]–[57]. Her Honour found that although the group members who did not sign up to the CLF agreement should not get a windfall, the amount of so-called ‘funding commission’ should be deducted from each of their claims and added back into the settlement sum and distributed pro rata to all group members: at [58]. Applicant’s expense claim: The claim was described as an amount representing a claim by Modtech for compensation for the time or expenses incurred by it in prosecuting the proceeding on behalf of the group members. Her Honour did not consider the proposed deduction from the settlement sum for the applicant’s expense claim to be fair and reasonable and instead designated a sum that would be deducted from the settlement sum: at [62]–[73].

22.55

P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 (Finkelstein J)

The court’s approval was sought pursuant to s 33V for the settlement of the representative proceeding. It followed a ‘lengthy and costly’ class action brought by 109 purchasers of allegedly over-valued securities issued by Multiplex companies: at [1], [6]. [page 337] The terms of the settlement agreement stated that Multiplex would pay $110 million to group members without any admission of liability on the condition that the applicants and class members release Multiplex companies from all future claims.

22.56 The settlement was approved by Finkelstein J after consideration of whether the settlement terms were ‘fair and reasonable’. In finding the proposed settlement fair and reasonable, Finkelstein J pointed to six relevant factors: The terms of the settlement were agreed on in arm’s length negotiations: at [19]. The agreement in principle to the settlement had arisen at a stage in the proceedings where the applicant’s solicitors and counsel had ‘sufficient information to assess the merits of the class claims’: at [20]. The applicant’s lawyers’ interests had not been put ahead of class members. This was evidenced by the fact that the fees received by the applicant’s counsel and solicitors, Maurice Blackburn, were independently assessed to be ‘fair and reasonable’. They also had extensive experience of class action litigation and had submitted opinion under privilege to Finkelstein J that the settlement was reasonable after considering various elements of the class action proceedings: at [21]. The class members stood to make a ‘significant recovery’ on the value of their respective claims (estimated to be 62 cents in the dollar): at [22]. Most significantly for Finkelstein J, no class member opposed the settlement. This had added weight because of the large number of institutional investors in the class. They had the means and experience to accurately ascertain the benefits of any settlement: at [23]. The uncertainty of protracted and expensive litigation and the risk of failure if settlement was refused favoured a ‘bird in the hand’ approach: at [24]. 22.57 His Honour also commented on the role of the court in protecting the interests of class members. While noting that the court should encourage settlement of class actions, Finkelstein J highlighted in obiter that the court assumes responsibility for protecting the interests of the class members and ‘acting akin to a guardian’ at the settlement stage of a proceeding: at [4], [23]. Although no class members (most of whom were institutional investors) opposed the settlement in this instance, Finkelstein J observed that in proceedings where most of the class has comparatively smaller stakes in a

proceeding, ‘[t]he absence of any objector adds to the court’s responsibility; it does not relieve it of its task’. His Honour emphasised the court’s role in protecting the applicant’s interests and the danger in assuming silence equals assent: at [23]. With reference to the practice of United States courts, Finkelstein J noted the merits of parties applying to the court for a preliminary evaluation of a proposed settlement so any potential obstacles to court approval may be resolved, particularly in the case of complex settlements. [page 338]

22.58

Peterson v Merck Sharp & Dohme (Aust) Pty Ltd (No 6) [2013] FCA 447 (Jessup J)

The settlement approval hearing in Peterson v Merck Sharp & Dohme occurred after Jessup J had given judgment at first instance and the matter had been appealed to the Full Federal Court and judgment handed down. Special leave to appeal to the High Court was refused. The matter related to allegations made by Mr Peterson, on his own behalf and on behalf of the group members, that Vioxx, an anti-inflammatory drug sold by the respondent, caused him to suffer a myocardial infarction. The settlement proposed by the parties involved a procedure whereby the solicitors for the parties would determine whether a particular group member (of which there were 1660) satisfied certain criteria, being whether the group member had suffered a myocardial infarction or sudden cardiac death and consumed the drug Vioxx at the date of their injury and for a specified period prior to his or her injury: at [13]. Under the settlement, group members who satisfied both criteria would be entitled to certain payments: at [14]. His Honour found that the settlement did not discriminate between group members who had satisfied the criteria but who had other risk factors that may have caused their myocardial infarction, which was the situation that arose in Mr Peterson’s case. His Honour stated that not only did he consider this was an important discrimination, it was ‘the very basis upon which the

applicant’s case on causation failed on appeal’: at [17]. His Honour went on to state (at [19]–[20]): According to the authorities to which I was referred, it is now well-established that the question by reference to which an application for approval under s 33V of the Federal Court Act should be addressed is whether the proposed settlement is fair and reasonable in the interests of group members as a whole. There are two features of the proposed settlement in the present case which do not give rise to concerns against the requirements of that test. The first is that the benefit of the settlement is confined, at its broadest, to the 1660 group members referred to in para 3 above. By a procedure which I accepted at the time was fair and reasonable, an exclusive protocol was established on 4 August 2010 by which group members would register their intentions of making claims under the terms of my original judgment in the applicant’s case. I now take the view that it is fair and reasonable for the settlement to be confined to those who so registered. The second is that the benefit of the settlement is confined to those who pass through the two criteria gates referred to in para 13 above. I accept that a group member who does not do so would have no real prospect of succeeding even under the terms of that original judgment. However, once the class of potential beneficiaries is narrowed in those two ways, I would have concerns about the approach which the applicant has taken to the distribution of the sum which the respondents, apparently, are prepared to pay for the settlement which is proposed. Under the proposed settlement, for group members whose circumstances are similar to those of the applicant, the payment of the monetary sum proposed would constitute

[page 339] a windfall. For the applicant himself, who lost his case and faces a very substantial liability in costs to the respondents, the proposed settlement would have very obvious advantages. On the other hand, for a group member who might, consistently with the reasons of the Full Court, anticipate a favourable judgment, the settlement would represent an obvious injustice. In relation to those in the latter category, the applicant has taken upon himself the burden of conducting a representative proceeding, and has had a sufficient measure of success to make it both unfair and unreasonable of him now, in effect, to walk away from the claims of those group members on the strength only of being able to settle the claims of the less deserving group members. In doing so without discrimination, the applicant has, in my view, reached a settlement which should not be approved under s 33V.

22.59

Taylor v Telstra Corporation Ltd [2007] FCA 2008 (Jacobson J)

The applicant alleged that the respondent breached its continuous disclosure

obligations set out in Corporations Act 2001 (Cth) s 674. The respondent denied the allegations and made no concessions throughout the trial of the proceeding. On 9 November 2007, the applicant and respondent entered into a deed of settlement to resolve the proceedings and on 10 December 2007, the applicant filed a notice of motion seeking the court’s approval of the settlement pursuant to Federal Court Act s 33V. The proposed settlement scheme resulted in the respondent paying the total sum of $5 million to an account maintained by the applicant’s solicitors. The settlement amount was divided up into three parts: legal costs and disbursements of the applicant ($1.25 million); an amount to be directed to an organisation known as Link Market Services which managed the respondent’s share register; and $3.7 million to group members via the settlement scheme. 22.60 Jacobson J considered the court’s obligations pursuant to s 33V (at [56]–[66]) and concluded that he ought to approve the settlement regardless of whether he adopted the approach of Jessup J in Darwalla Mining Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322 or Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) (2001) 180 ALR 459. The reasons for approving the settlement were as follows: Counsel for the applicant had provided a joint opinion that the proposed settlement was fair and reasonable. His Honour stated that although this is a matter that carries weight in the exercise of his discretion, ultimately he needed to be satisfied that the settlement was in accordance with the relevant principles: at [68]. In considering the objections made to the settlement (of which there were four) in the context of the evidence presented in support of the settlement, the application of the tests stated in the authorities would provide that the overall settlement was fair and reasonable: at [70]–[80]. [page 340]

22.61

Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; [2000] FCA 1925 (Goldberg J)

The applicant bought two home alarm systems from the first respondent between 9 July 1993 and 9 July 1999. The second respondent financed the purchase of the alarm systems. The applicant alleged that by selling (and in the case of the second respondent, financing the sale of) the alarm systems the respondents were in breach of Trade Practices Act ss 52, 53, 73, 74G and 76. The applicant by notice of motion sought to amend the description of the group members and obtain the court’s approval for a settlement under Federal Court Act s 33V. Goldberg J dismissed the applicants’ application in full, holding that reducing the size of the group and not notifying all group members of the proposed settlement frustrated the policy purposes underlying this Part of the Act. 22.62 A central consideration under Federal Court Act s 33V was whether the settlement is fair and reasonable. His Honour cited authority applying a nine-factor test of a reasonable settlement (at [19]): Ordinarily the task of a court upon an application such as this is to determine whether the proposed settlement or compromise is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. Ordinarily in such circumstances the court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement. In Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation 55 F 3d 768 at 785 (1995) the United States Court of Appeals for the Third Circuit referred to the nine-factor test it had adopted: … to help district courts structure their final decisions to approve settlements as fair, reasonable and adequate as required by Rule 23(e) [which requires court approval for settlement of class actions]. See Girsh v Jepson 521 F 2d 153 at 157 (1975) (3rd Cir). Those factors are: (1) the complexity and duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings; (4) the risks of establishing liability; (5) the risks of establishing

damages; (6) the risks of maintaining a class action; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement in light of the best recovery; and (9) the range of reasonableness of the settlement in light of all the attendant risks of litigation. (See also County of Suffolk v Long Island Lighting Co 907 F 2d 1295 at 1323 (1990) (2nd Cir), 5 Moore’s Federal Practice, 3rd ed, pp 23–348.) This

[page 341] nine-factor test is equally helpful in the Australian jurisdiction and I find it a useful guide in considering the present proposed settlement.

22.63 Goldberg J held that if he limited his consideration to looking at whether the proposed settlement was fair and reasonable with respect to the parties of the settlement, he would find the settlement was fair and reasonable. However, that consideration was complicated by the fact that the group defined in the settlement was much smaller than the overall number of group members. His Honour said (at [20]): The proposed settlement is complicated by the fact that the settlement offer is not being made to the present group members. Rather, it is specifically limited to persons who have contacted Maurice Blackburn Cashman, the solicitors for the applicants, and who have signed a fee and retainer agreement with them. If I limit my consideration of the settlement to whether it is fair, reasonable and adequate in relation to the interests of the group members who will be bound by it, and whose causes of action against the respondents will merge in the settlement agreement, if approved by the court, I am satisfied that the settlement is fair, reasonable and adequate, having regard to the nine-factor test to which I have referred and to the advice of counsel and the technical expert retained by the applicants’ solicitors.

His Honour stated the following in regards to the potential conflict of interest that may arise as a result of changes to the group definition (at [22]): I consider that a potential conflict of interest arises where a representative party in a representative proceeding seeks to settle the proceeding by limiting or narrowing the definition of the group so as to exclude some of the group members from the settlement. It is in the interests of those who can obtain a benefit under the settlement to have it approved rather than to have the proceeding continue. It is not in the interests of those who will not obtain a benefit under the settlement to have it approved with the result that the proceeding will terminate. Rather it is in their interests for the proceeding to continue, at least until it generates an offer of settlement which will give them a benefit. If the proposed settlement is approved, then they will be cast adrift from any representative proceeding and they will

become group members without the benefit of a representative proceeding. The present proceeding calls to mind the observation of the United States Supreme Court in Deposit Guaranty National Bank v Roper 445 US 326 50 at 339 (1980): Where it is not economically feasible to obtain relief within the traditional framework of multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the classaction device.

22.64 His Honour found that regard needed to be had to the members of the class who were not defined in the settlement, and the possible impact of the settlement on them. He considered that at the least those group members should be given notice of the proposed settlement and thereby be given the opportunity to put [page 342] their views before the court before a determination was made whether to approve the settlement: at [23]. Goldberg J considered that although a representative party is entitled to reach a settlement with a respondent, before being allowed to withdraw as the representative party, he or she must give notice to group members to ensure, if any of those group members desire, that another group member can be substituted as the representative party to enable the representative proceeding to continue. He stated (at [29]): The policy of Pt IVA of the Act is against allowing a respondent in a representative proceeding to settle with a representative party, and not with other members of the group, in such a manner as to cut the proceeding adrift from the umbrella of Pt IVA of the Act, without giving the other group members the opportunity to maintain the character of the proceeding as a representative proceeding pursuant to Pt IVA.

22.65

In rejecting the settlement, his Honour found (at [43], [45]–[47]):

I consider it quite inappropriate and unjust that a settlement should be approved without notice of it being given to all present group members, in circumstances where the settlement has as its cornerstone the fact that group members have made contact with the solicitors and signed a fee and retainer agreement with them, and where the respondents have made incorrect statements calculated to cause group members to turn away from making contact with those solicitors. In my view it is unjust to approve the settlement and thereby exclude

such group members from it, without first bringing to their attention, via a correction notice, the fact that incorrect statements have been made which bear upon issues in the proceeding. … I am therefore not prepared to consider whether I should approve the proposed settlement until the correction notice, which I have already ordered, is sent to present group members and present group members are also given notice of the terms of the proposed settlement. Both of these matters might be addressed in the one notice but it would be necessary to hear submissions as to the form of any such notice if the applicants wish to proceed with their application for approval of the settlement. It follows that I am not prepared to give the applicants leave to amend the application so as to limit the group members in the manner sought. I am also not prepared to approve the settlement in its present terms, nor am I prepared to order that notice be given to group members in the form proposed, that is to say, in a form which informs present group members that the proceeding has been settled with known group members. I am, of course, prepared to consider any application to approve a settlement of the proceeding after a notice or notices of the type to which I have referred have been sent to the present group members. It would be desirable for the court to approve the terms of any notice of the proposed settlement to be given to present group members. If a further application is made to the court to approve a settlement of the proceeding, there is another matter that would need to be addressed which was

[page 343] not adverted to by counsel or by myself in the course of argument. This relates to that part of the proposed settlement under which the respondents will pay the applicants’ solicitors $376,135 in respect of their costs and disbursements in this proceeding. This part of the settlement is as much subject to the approval of the court as is the proposal that each known group member receive $1000 in one form or another. No evidence was placed before the court as to the manner in which the amount had been ascertained, or that it was fair and reasonable having regard to the work undertaken and performed by the solicitors. I consider it necessary that evidence be placed before the court as to these matters. I agree with the observation of Merkel J in Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167; 166 ALR 731 where his Honour said (at FCR 176; ALR 740): I have no difficulty in accepting that Pt IVA could lose much of its utility if solicitors acting for representative parties are not able to be fairly and adequately reimbursed in respect of the costs they incur in a representative proceeding where they are reliant on a ‘successful outcome’ for payment of their fees. I also accept that under Victorian law solicitors can properly be rewarded by their clients for the cost risks they undertake by entering into conditional costs agreements that can include an uplift fee, being a premium not exceeding 25% of the costs and disbursements incurred by the solicitors.

I am not querying the amount proposed, I am simply requiring that evidence be placed before the court from which the court can draw relevant conclusions as to the fairness and reasonableness of the costs to be paid.

Goldberg J dismissed the applicants’ submissions to approve the settlement in full.

22.66

Wright Rubber Products Pty Ltd v Bayer AG (No 3) [2011] FCA 1172 (Tracey J)

Wright Rubber Products Pty Ltd (Wright Rubber) brought proceedings as a representative party on behalf of group members who were Australian commercial manufacturers of ‘rubber compounds’ or ‘rubber products’. They alleged that they were forced to pay higher prices for rubber chemicals because of a global cartel arrangement. There were five respondents: Bayer AG, Bayer Australia Ltd, Chemtura Corporation, Crompton Manufacturing Company and Chemtura Australia Pty Ltd. The cartel arrangement was said to have been entered into in or about July 1995. Tracey J noted (at [7]) that the principles which guide the court in the exercise of its power under s 33V were collected by Jacobsen J in Taylor v Telstra Corporation at [56]–[66]. Those principles were said to be reflected in the terms of Practice Note CM 17, where para 11 advised applicants for approval under s 33V: at [8]. The decision to settle the proceedings was based on the uncertainties of litigation and the capacity of the cartel members to meet any damages award. Tracey J was unable to detect any actual or potential unfairness to any group member arising from the outcomes produced by the formulae put forward, and in all the circumstances, [page 344] considered that the proposed settlement was fair and reasonable having regard to the interests of the group members: at [24]–[25].

22.67

Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 (Osborne J)

A section of a power line known as the Valley Span conductor located at Kilmore East broke and, upon striking the ground, ignited a bushfire. In the course of the fire, 119 people died, more than 1000 suffered serious injury, and approximately 1772 homes and properties were destroyed or damaged. The plaintiff commenced proceedings on her own behalf and on behalf of persons (at [22]): (a) referred to on a list of persons filed with the court who make claims: (i) in respect of any personal injury; or (ii) pursuant to Wrongs Act 1958 Pt 3 in consequence of the death of another person as a result of the fire. (the ‘I-D claimants’) (b) Those who make claims: (i) in respect of property loss or damage; or (ii) in respect of economic losses not consequent upon injury to that person or loss or damage to their property. (the ‘ELPD claimants’).

The claim was brought against the owner and operator of the power line (AusNet Electricity Services Pty Ltd, formerly SPI Electricity Pty Ltd (SPI)), a maintenance contractor charged with carrying out a periodic inspection of the power line (referred to as ‘UAM’) and various entities of the state of Victoria variously charged with the management of forest lands, the fighting of fires, and the policing of emergencies (‘the State parties’). The class action settled for $494,666,667, contributed by SPI ($378.6 million), UAM ($12.5 million) and the state parties ($103.6 million for I-D claims only). The court approved the payment of costs and disbursements of $60 million. The number of claimants in each category and their expected recoveries were as follows:

Personal Injury and Dependency Claims (I-D Claims) 1481 claimants 3/8 of settlement fund Each claimant’s recovery capped at 80%

Economic Loss and Property Damage Claims (ELPD Claims) 9174 ELPD claims registered comprised of: (a) 4138 above insurance claims made by approximately 3772 above insurance claimants; and

[page 345]

Claimants expected to recovery 66% of total losses Any excess funds transferred to ELPD

(b) 5036 subrogated claims made by approximately 25 insurers Approximately 3092 above insurance claimants and 25 insurers will receive payments as part of the ELPD final distribution 5/8 of settlement fund Claimants expected to recovery 33% of total losses

Osborne J summarised the reasons for approving the settlement at [18]: (a) $500 million is a large and commercially significant sum in itself; (b) it will result in a level of substantial compensation for group members; (c) that compensation will be achieved in circumstances where they faced some real risk of a nil outcome; (d) even if some substantial success were achieved, group members also faced a series of other significant subsidiary risks with respect to particular causes of action and heads of damage; (e) the settlement offers group members a series of material advantages which will not be achievable if the matter proceeds further; (f) having regard to these factors, the settlement figure is comfortably within the range of reasonable settlements; and (g) the proposed settlement distribution scheme (SDS) is appropriate and a fair compromise as between group members.

In support of the legal costs claimed, the court was provided with the confidential reports of two independent costs consultants who were retained by the lawyers for the plaintiff to provide opinions as to whether the legal costs and disbursements calculated in accordance with the retainer between the plaintiff and the lawyer, including a 25% uplift, were fair and reasonable. The disbursements included payments to counsel and 26 experts. The costs consultants concluded that the reasonable legal costs and disbursements for the proceeding were comfortably in excess of the $60 million proposed in the settlement agreement between the parties. Osborne J, being satisfied with the methodology employed by the costs consultants, that the plaintiff had been kept informed of legal costs as they were incurred, that the quantum had been disclosed in the settlement notice to group members and that there were no objections to the fees (including from the insurers who were part of the class action due to subrogation), approved the legal fees and disbursements. Osborne J also approved the SDS procedure after summarising it. [page 346]

22.68

Kelly v Willmott Forests Ltd (in liq) (No 4) [2016] FCA 323; (2016) 335 ALR 439 (Murphy J) Kelly v Willmott Forests Ltd (in liq) (No 5) [2017] FCA 689 (Murphy J)

The applicants and class members were investors in forestry plantation managed investment schemes that failed. Originally three interrelated class actions were commenced on 22 December 2011 in relation to schemes from 2007, 2008 and 2009. In one proceeding, the claims were made against the two companies which were the responsible entities in the schemes under the Corporations Act 2001 (Cth), Willmott Forests Ltd (Willmott Forests) and Bioforest Ltd (Bioforest), and their directors. In the other two, the claims were made against the lenders, MIS Funding No 1 Pty Ltd (MIS) and the

Commonwealth Bank of Australia Ltd (CBA), which financed some of the investors into the schemes. On 13 March 2013, a fourth class action in relation to a 2010 scheme was commenced against Willmott Forests as responsible entity, the directors and a further lender, Willmott Finance Pty Ltd (with MIS and CBA, the Lenders). The key features of the proposed settlements were set out at [36]: no compensation or damages is to be paid to the class members in respect of their losses, and: — in the case of the 2007/08/09 scheme proceedings, there is no reduction in the outstanding balances of their loans but the Lenders grant an extension of time to make repayments for class members currently in default; or — in the case of the 2010 scheme proceeding, three options are provided for the reduction of outstanding loan balances (representing various trade-offs between delaying payment and reducing the loan balance). amounts are to be paid by the respondents, to be expended on the pro rata reimbursement of class members who are or were clients of the lawyers acting in the class action and to refund monies paid as security for costs or to cover insurance taken out: — in the 2007/08/09 scheme proceedings, $3.1 million is to be paid to partially reimburse a total of $6.086 million in legal costs to the law firm and approximately $2 million paid to a fund for security for costs returned to class members who had made contributions; — in the 2010 scheme proceeding, $1.408 million is to be paid, $1 million of which is to be expended to partially reimburse a total of $1.749 million in legal costs and $408,000 of which is to be expended to pay Amtrust Europe Limited for an After the Event insurance policy taken out by the applicant to cover adverse costs. the applicants in each proceeding will provide binding admissions on behalf of the class members as to the validity and enforceability of the loan agreements between the Lenders and class members (‘the binding loan enforceability admissions’).

[page 347] the applicants in each proceeding will agree on behalf of the class members, that if a class member obtains damages or compensation in any Third Party Proceeding (as defined) and an order for contribution is made against a Lender or a related party in respect of those damages or compensation, the class member will indemnify the Lender or related party against that order for contribution (‘the indemnity term’). ‘Third Party Proceeding’ is broadly defined, and includes any claim brought by the applicant or a class member against a person who is not a party to the Settlement Deed arising out of or relating to their investment in one or more of the relevant schemes. This would include financial advisors who recommended the acquisition of interests in the Schemes. the applicants in each proceeding, on their own behalf and on behalf of the class members, will provide broad releases to the respondents. The settlement took place after class members were provided with the opportunity to opt out as mandated by Federal Court of Australia Act 1976 (Cth) s 33J and after a ‘class closure’ process. Pursuant to the class closure process, orders were made which provided that class members who did not satisfy the requirements for registration continued to be class members, but were excluded from seeking any relief in the proceeding or any benefit from a settlement (‘non-participating class members’). One of the requirements for registration in the 2007/08/09 scheme proceedings was either to make a contribution to a fund to provide security for costs or to provide information to show that the class member was financially unable to do so. As a result of these orders, about 77% of class members in the 2007/08/09 scheme proceedings (approximately 2427 persons) and 52% of the class members in the 2010 scheme proceeding (approximately 182 persons) were not permitted to obtain the benefit of the settlements but were subject to the binding loan enforceability admissions. Murphy J declined to approve the settlement for the following reasons: The binding loan enforceability admissions would be significantly detrimental for some class members because it would preclude them from

defending loan enforcement proceedings by the Lenders on any basis, even in reliance on claims or defences that were not pleaded in the class actions and which are based on a class member’s individual or unique circumstances. Moreover, class members were not clearly informed that if they did not opt out they would be so precluded. Further, the proposed settlement did not allow class members an opportunity to opt out at the point of settlement. There were substantial difficulties in funding the proceedings that resulted in significant gaps in the preparation of the cases. Class members were not informed of these matters. If they were properly informed, they may have chosen to opt out of the proceedings by the date fixed, or sought an order extending the opt-out period. [page 348] Gaps in case preparation and some shortcomings in the confidential opinion of counsel meant that the applicants’ lawyers could not properly inform the court as to the prospects of success. The court raised as a concern the existence of potential conflicts of interest, including conflicts of duty and duty, as a result of the terms of the settlement. The first conflict was between the interests of class members who registered in the class member registration process (‘registered class members’) and the interests of ‘non-participating class members’. While all class members give up their claims and are subject to the binding loan enforceability admissions, only the registered class members receive any benefit in return. Registered class members may have an interest in accepting the settlement so as to obtain the benefits on offer. However, non-participating class members have no reason for accepting such an offer. Indeed, their interest was described by Murphy J as being ‘the proceedings continuing, at least until a settlement is reached which does not preclude them from bringing claims or defences against the respondents based in their individual or unique circumstances, or which allows them to opt out of a settlement which they consider to be unfair’: at [318]. A duty-duty conflict of interest may then arise for the

lawyers who are required to act in the interests of both sets of class members. Registered class members had paid M+K a total of $7.835 million in legal costs and there was insufficient material before the court to show the reasonableness of those costs. There was also evidence that M+K had not performed all of the legal work which it had agreed to undertake In Kelly v Willmott Forests Ltd (in liq) (No 5), the settlement had been recast and was approved by Murphy J. The alterations to the settlement included: The releases no longer include the binding loan enforceability admissions, and do not extend to class members’ individual claims and defences which are not pleaded in the class actions. The conflict of interest between the interests of the applicants and registered group members on the one hand and those of unregistered class members on the other, are largely addressed by the removal of the binding loan enforceability admissions, and the retention of the rights of class members to bring individual claims and defences. Comprehensive opinions of counsel dealing with the applicant’s prospects of success at trial were provided to the court. The reasonableness of legal fees was addressed through the expert opinion of an independent costs consultant. Class members were informed of the gaps in trial preparation. Registered class members were provided a further opportunity to opt out of the proceedings, and unregistered class members could seek leave of the court to opt out. [page 349]

22.69

Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (No 3) [2017] FCA 330 (Beach J)

The Allco class action was commenced in the Federal Court on 8 August 2013. Some five years before that, attempts were made to obtain litigation funding to support the class action. A number of funders came and went. The class action was commenced with finance from International Litigation Funding Partners Pty Ltd (ILFP). The claim was that Allco had contravened its continuous disclosure obligations and engaged in misleading or deceptive conduct. The class action was also brought against the estate of Allco’s executive chairman and Allco’s auditor. On 13 November 2016, the parties agreed a settlement which involved two tiers of settlement. The First Tier Settlement involved $30 million being paid to the registered group members that had registered an interest with the applicant’s law firm on or prior to 4 November 2016 (RGM). The RGM numbered 1127 persons who held 15,803,327 shares. The Second Tier Settlement was a further amount up to $10 million for unrepresented and unregistered group members, being those persons who had not previously registered to participate in the proceeding, but who came forward and registered prior to the Expiry Date (UGM). The ‘Expiry Date’ was defined as the earlier of: (i) the date that was six months after the court approved the Settlement Distribution Scheme; and (ii) when registrations of UGM would have the effect, upon payment, of exhausting the Second Tier Settlement Sum. For the entirety of the $10 million to be paid there needed to be participation in the settlement by 8,651,664 shares. The UGM that sought to participate in the Second Tier Settlement vastly exceeded the numbers expected by the applicant’s lawyers. The need to register was communicated to UGMs on 20 December 2016. UGMs were able to register online and by submitting hard copy forms. The amount of $10 million was exhausted at some point on 9 January 2017 but exactly when, and which UGMs had registered prior to the exhaustion of the $10 million could not be determined, because of the use of the online and hard copy registration process. Nonetheless, the applicant’s solicitor continued to receive and record registrations after 9 January 2017 which saw almost double the number of shares needed to exhaust the settlement registered. The number and timing of UGM Registrations may be summarised as follows:

UGM Registrations between UGM Registrations after 9 January 20 December 2016 and 9 2017 January 2017 2075 UGMs with 9,284,413 1928 UGMs with 6,710,758 shares shares

Total UGM Registrations

4003 UGMs with 15,995,171 shares

Beach J described the number of registrations by unidentified group members compared to the known group members seen in previous class actions, and the [page 350] speed with which they signed up, as ‘unprecedented’. Beach J explained the response as being due to (1) the use of Allco’s share registry to directly contact shareholders so that they were made aware of the class action; and (2) the fact that a settlement had been reached so that a recovery was assured. While the class action facilitated access to justice by allowing so many shareholders to seek compensation, the $10 million cap created a significant problem. Beach J considered seven potential solutions but determined that all UGMs would be allowed to participate in the settlement, but that the sum available to them would remain at $10 million. Instead of $10 million being shared across 8,651,664 shares in accordance with the planned structure of the settlement, the $10 million was shared amongst 15,995,171 shares. Each UGM’s recovery was substantially diluted. His Honour rejected other options: not approve the settlement; adopt the 9 January 2017 cut-off; adopt the 9 January 2017 cut-off but permit the late registrants to opt out or exclude them from the class definition so that they could still pursue their claims (assuming they did so before the expiry of any statute of limitations); adopt the 9 January 2017 cut-off but include those late registrants that had objected to being excluded;

combine the First Tier Settlement and Second Tier Settlement to create one fund of $40 million that all group members shared in; include all UGMs but supplement the settlement sum with funds that would otherwise be payable to the litigation funder. His Honour did not suggest that the lawyers forgo any of their fees. To avoid a repeat of this experience, Beach J advocated for greater use of the share register earlier in class actions to communicate with group members and to require registration of group members (but not with an order barring the claims of non-registrants) before mediation so as to identify the group members that will participate in any settlement. The applicants had previously and unsuccessfully sought a common fund order for the payment of the litigation funder’s fee: Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539; [2015] FCA 811. Once the settlement was reached, and court approval required pursuant to s 33V, a further application for a common fund order was sought, being 30% of the net settlement sum, that is, the total settlement less legal costs. Beach J made the requested order. His Honour identified the following advantages of the common fund in the current case: 30% is lower than the contractually agreed amounts of 32.5% (holdings of $1 million or more) and 35% (holdings less than $1 million). The percentage is applied to the net settlement sum compared to the funding contract which applied to the gross settlement. [page 351] A common fund is superior to a funding equalisation order. A funding equalisation order applies the funder’s fee that some group members agreed to in the funding agreement to the group members who had not entered into a funding agreement. The common fund allows for an open class which enhances access to justice. The funder does not need to sign up group members and as a result the class action may be commenced more quickly.

The funding provided by ILFP and the potential fee calculations may be summarised as follows: Total amount paid by funder and at risk if class action lost (legal costs, disbursements and security for costs) Funder’s contractual fee entitlement (1127 group members with 66% of share holdings in the class action) Funder’s contractual fee entitlement plus funding equalisation order Common fund order — 30% of net settlement sum/22% of the gross settlement sum

$9,640,513.62 $8,999,221.43 In excess of $10 million $8.85 million

Based on the above determinations by the court, it was estimated that the settlement sum would be distributed roughly as follows:

Amount available for distribution Applicants’ legal costs Applicants’ reimbursement payments Funder’s commission (30%) Net amount available for distribution to group members

First Tier Settlement Sum – Paid to RGM (15,803,327 shares) $30 million

Second Tier Settlement Total Sum – Paid to UGM (15,995,171 shares) $10 million $40 million

$10.15 million $30,000

$0.35 million $10,000

$10.5 million $40,000

$5.955 million

$2.895 million

$8.85 million

$13.865 million

$6.745 million

$20.61 million

The court saw the recovery of $20.6 million ‘in hand’ by the applicants and group members so that they obtained slightly more than 50% of the gross settlement as supporting approval of the settlement.

[page 353]

CHAPTER 23 Settlement of Individual Claim of Representative Party: s 33W • OVERVIEW • Section 33W sets out the mechanism to be followed where: (a) a representative party seeks to settle his or her individual claim; (b) that representative party then seeks to withdraw as the representative party for the representative proceeding; and (c) another group member may wish to be substituted as a new representative party for the representative proceeding. Judicial consideration of s 33W is limited. Past experience, as shown by the authorities discussed in relation to s 33V, suggests that settlements usually include the representative party and group members.

• LEGISLATION • Section 33W, Federal Court of Australia Act 1976 (Cth) Settlement of individual claim of representative party (1) A representative party may, with leave of the Court, settle his or her individual claim in whole or in part at any stage of the representative proceeding. (2) A representative party who is seeking leave to settle, or who has

settled, his or her individual claim may, with leave of the Court, withdraw as representative party. (3) Where a person has sought leave to withdraw as representative party under subsection (2), the Court may, on the application of a group member, make an order for the substitution of another group member as representative party and may make such other orders as it thinks fit. [page 354] (4) Before granting a person leave to withdraw as a representative party: (a) the Court must be satisfied that notice of the application has been given to group members in accordance with subsection 33X(1) and in sufficient time for them to apply to have another person substituted as the representative party; and (b) any application for the substitution of another group member as a representative party has been determined. (5) The Court may grant leave to a person to withdraw as representative party subject to such conditions as to costs as the Court considers just.

Section 33W, Supreme Court Act 1986 (Vic) Settlement of individual claim (1) The plaintiff may, with the leave of the Court, settle the plaintiff’s individual claim in whole or in part at any stage of the group proceeding. (2) The Court may order that a person who has settled the person’s individual claim in whole or in part cease to be plaintiff. (3) If an order is sought under subsection (2), the Court may, on the

application of a group member, make an order substituting as plaintiff a group member who consents to that substitution. (4) An order must not be made under subsection (2) unless the Court is satisfied that— (a) notice of application for the order has been given to group members in accordance with section 33X(1); and (b) such notice was given in sufficient time for an application to be made for an order under subsection (3); and (c) an order under subsection (3) has been or will be made. (5) The Court may make an order under subsection (2) or (3) on such terms and conditions, as to costs or otherwise, as the Court thinks fit.

Section 174, Civil Procedure Act 2005 (NSW) Settlement of individual claim of representative party (1) A representative party may, with the leave of the Court, settle the party’s individual claim in whole or in part at any stage of the representative proceedings. [page 355] (2) A representative party who is seeking leave to settle, or who has settled, the party’s individual claim may, with the leave of the Court, withdraw as representative party. (3) If a person has sought leave to withdraw as representative party under subsection (2), the Court may, on application by a group member, make an order for the substitution of another group member as representative party and may make such other orders as it thinks fit. (4) Before granting a person leave to withdraw as a representative party:

(a) the Court must be satisfied that notice of the application has been given to group members in accordance with section 175(1) and in sufficient time for them to apply to have another person substituted as the representative party, and (b) any application for the substitution of another group member as a representative party must have been determined.

Section 33W, Civil Proceedings Act 2011 (Qld) Settlement of individual claim of representative party (1) A representative party may, with the leave of the court, settle the party’s individual claim in whole or part at any stage of the representative proceeding. (2) A representative party seeking leave to settle, or who has settled, the party’s individual claim may, with leave of the court, withdraw as the representative party. (3) If a representative party seeks leave to withdraw under subsection (2), the court may, on the application of a group member, make— (a) an order for the substitution of a group member as the representative party; and (b) any other orders in relation to the substitution it considers appropriate. (4) Before a representative party may be granted leave to withdraw under subsection (2)— (a) the court must be satisfied that notice of the application has been given to group members under section 103T in sufficient time for a group member to apply under subsection (3) to have someone substituted as the representative party; and (b) any application for the substitution of a group member as representative party must have been decided.

[page 356]

• COMMENTARY • Purpose of Provision 23.1

The purpose served by s 33W is threefold:

(a) First, to allow a representative party to settle his or her individual claim. The Australian Law Reform Commission (ALRC) saw no reason why the representative party should not be able to settle their individual claim: see Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [217]. (b) Second, to allow that representative party to withdraw from the role of representative party. This reflects the uncontroversial proposition that ‘[a]n unwilling party should not be forced to litigate against his or her will’: see Tongue v Council of the City of Tamworth (2004) 141 FCR 233 (Tongue) at [32]. (c) Third, to give the remaining group members the opportunity to substitute another group member as a representative party, so that the class action can continue: see Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 at [28]–[30]. Once the representative party has settled his or her individual claim, he or she no longer has a personal interest in the class action. It will generally be in group members’ interests for a group member whose claim is still on foot to be appointed as principal applicant: see Australian Law Reform Commission, ‘Grouped Proceedings in the Federal Court’ at [174]–[175]. However, it should be noted that the representative party is not required to withdraw and still has standing to pursue the class action pursuant to s 33D(2)(a).

Application for Leave to Settle Representative Party’s Individual Claim 23.2

Pursuant to s 33W(1), a representative party may, with leave of the

court, settle their individual claim. This leave may be sought after a settlement has been reached: Tongue at [32]. Jacobson J defined a ‘settlement’ for the purposes of s 33W(1) in Tongue as follows (at [32]): In ordinary parlance, for a claim to be settled, it must have been compromised. However, law dictionaries suggest that the element of compromise is not a necessary ingredient. As is said in Butterworth’s Australian Legal Dictionary at 1073, when a matter has been settled, the parties have reached some kind of agreement and no longer require the Court to deliberate between them. Another dictionary states that a ‘settlement’ means ‘an agreement ending a dispute or law suit’.

Jacobson J was satisfied that an agreement between the representative party and the respondent that specified that the representative party would not pursue his or [page 357] her individual claim against the respondent and that there would be no order as to costs between them was a ‘settlement’ for the purpose of s 33W. 23.3 An application for court approval of the settlement of a representative party’s individual claim is made by interlocutory application. The Practice Note does not provide any guidance as to the nature of the evidence that the court expects to see in support of the motion. Indeed, in Tongue, the representative party Mr Tongue did not adduce any evidence of the terms of any settlement with the respondent in support of his application. Nor did Mr Tongue’s barrister seek the court’s leave for the settlement of Mr Tongue’s individual claim. However, the respondent’s barrister stated in court that the respondent had given an undertaking to Mr Tongue not to pursue him for the costs of the proceeding. Jacobson J was prepared to infer from this concession that a ‘settlement’ had been reached for the purpose of s 33W. 23.4 The evidence adduced by the representative party in Tongue demonstrated that he was suffering from serious health problems and had lost

the confidence of approximately half of the group members. No other party to the litigation opposed his withdrawal. Jacobson J considered that this provided a compelling case for the representative party to withdraw from the proceeding (noting also that this evidence would have supported an application to withdraw under s 33T(1)).

Application for Leave to Withdraw as a Representative Party 23.5 Pursuant to s 33W(2), a representative party may, with leave of the court, withdraw as representative party. There are three conditions that must be satisfied if that leave is to be granted: (a) the draw must seek leave to settle, or have settled, his or her individual claim: s 33W(2); (b) the court must be satisfied that notice of the application has been given to group members in accordance with s 33X(1) and in sufficient time for them to apply to have another person substituted as the representative party: s 33W(4)(a); and (c) any application for the substitution of another group member as a representative party has been determined: s 33W(4)(b). Once these three conditions have been satisfied, the court may exercise its discretion under s 33W(2) to grant leave to a representative party to withdraw. Even once the three conditions are satisfied, this power is discretionary. However, it would be a rare case in which a representative party satisfied the three conditions but the court nevertheless refused to allow the representative party to withdraw. This is because the court would then be forcing the representative party to litigate against his or her will: Tongue at [37]. [page 358]

Notice Given to Group Members of Representative Party’s Application

23.6 As required by s 33W(4)(a), the group members must be given notice of the representative party’s application to withdraw. This notice must comply with s 33X(1). While s 33Y(2) requires the form and content of the notice under s 33X to be approved by the court, the court’s approval may be given retrospectively: Tongue at [9]. The notice must also be given in sufficient time for the group members to apply to have another person substituted as the representative party. In the Tongue proceedings, the notice was despatched some six weeks before the date set by the court for the filing of any motion for the substitution of the representative party. This was considered to be sufficient time for the purposes of s 33W(4)(a).

Substitution of Representative Party 23.7 Before an order granting the representative party leave to withdraw can be made, ‘any application for the substitution of another group member as a representative party’ must have first been determined: s 33W(4)(b). Practically speaking, this means that any application for substitution of a group member as a new representative party must be filed before the hearing of the withdrawing representative party’s application. As Jacobson J observed in Tongue, s 33W(4)(b) does not require that the court make an order for the substitution of another group member before it can grant leave to a representative party to withdraw. Rather, all that is required is that the court determine any application for substitution: Tongue at [35]. Consequently, a representative party can be granted leave to withdraw even if the application to substitute another group member is denied. The fact that there will then be no applicant is not a barrier to the granting of leave to the representative party to withdraw: Tongue at [36]. If no further person comes forward indicating that he or she is prepared to be substituted as a representative party, an order may be made under s 33N(1) that the proceeding no longer continue under Pt IVA of the Act as a representative proceeding: see Tongue v Council of the City of Tamworth [2005] FCA 124.

23.8 While it is not clear whether a representative party can withdraw under s 33W(2), if no group member applies to be substituted before the determination of the application to withdraw, the better view is that the representative party can withdraw. In Tongue, Jacobson J commented in obiter (at [36]): … if no other group member steps forward to be substituted then the third condition for the exercise of the power [conferred in s 33W] will not arise.

[page 359] On this view, if a representative party settled their individual claim and applied to withdraw but no other group member applied to take their place, then the representative party’s application to withdraw would necessarily fail. However, it is not entirely clear that this is what Jacobson J intended to mean. His Honour continued by observing that an unwilling party should not be forced to litigate against his or her will. In any event, such a view is not consistent with the wording of s 33W(4) (b). The subsection merely requires any application for substitution to be determined, not that there be an application for substitution and that application be determined. Pursuant to s 33W(3), a group member may apply to be substituted as a representative party. This application may only be made if the current representative party has sought leave to withdraw under s 33W(2). The court may make an order for the substitution of another group member as representative party and may make such other orders as it thinks fit. Where a group member applied to be substituted as a representative party unconditionally, the court would ordinarily make such an order: Tongue at [2].

Conditional Application for Substitution 23.9

As the power to make an order for substitution under s 33W(3) is

expressed in wide discretionary terms, it includes the power to make an order on certain conditions: Tongue at [46]. Since a group member who is substituted as a representative party becomes liable to pay the costs of the proceeding if unsuccessful, a group member applying for substitution under s 33W(3) may seek to attach conditions relating to costs to their substitution. For example, it is possible to make an order under s 33W(3) substituting a group member as a representative party, on the condition that that person would not be liable for the costs of the proceedings incurred before the date of substitution: Tongue at [46]. However, it has been suggested that such an order will ordinarily not be made, because the group member seeking substitution will obtain whatever benefit flows from the preparation which has already taken place, and the respondent will be deprived of the potential to obtain a costs order for the whole of the proceedings if the class action is unsuccessful: Tongue at [49]. To justify the exercise of the discretion to make such an order, a group member must demonstrate exceptional circumstances. Examples of such circumstances might include that without such a condition the proceeding will abate, or that the group member seeking substitution will be unable to obtain an indemnity from other group members against liability: Tongue at [51].

Settlement and Standing to Continue the Proceeding 23.10 Section 33D(2) provides that even where that person ceases to have a claim against the respondent, the person who commenced the proceeding is deemed to retain a sufficient interest to continue that proceeding and to bring an [page 360] appeal from a judgment in that proceeding. The settlement of a representative party’s claim would result in them ceasing to have a claim: see s 33D (Chapter 5).

• CASE LAW • 23.11

Tongue v Council of the City of Tamworth (2004) 141 FCR 233 (Jacobson J)

The representative party, Mr Tongue, was suffering from serious health problems and had lost the confidence of approximately half of the group members. Mr Tongue reached an agreement with the respondent that he would withdraw from the class action and the respondent would not pursue him for the costs of the proceedings to that date. Accordingly, Mr Tongue sought leave to withdraw as a representative party. Another group member, Reganam Pty Ltd, sought an order that it be substituted as representative party, subject to a condition that it not be liable for the costs of the proceedings incurred before the date of substitution: at [46]. Jacobson J allowed Mr Tongue’s application to withdraw. While Mr Tongue’s barrister submitted that the application was based on s 33T, Jacobson J held that the motion was properly characterised as having been brought under s 33W. Jacobson J held that Mr Tongue and the respondent had reached a ‘settlement’ for the purpose of s 33W; that sufficient notice of the application had been given; that the substitution application had been determined (see below); and that there was otherwise a compelling case for Mr Tongue to withdraw. However, Jacobson J declined Reganam Pty Ltd’s conditional application for substitution as a representative party, on the basis that his Honour was not willing to impose the condition sought by Reganam Pty Ltd. His Honour made orders giving Reganam Pty Ltd or other group members an opportunity to apply to be substituted unconditionally. Subsequently, neither Reganam Pty Ltd nor any other group member came forward indicating that he or she was prepared to be unconditionally substituted as a representative. As a result, Jacobson J made an order under s 33N(1) that the proceeding no longer continue under Pt IVA of the Act as a representative proceeding.

23.12

Oasis Fund Management Ltd v Royal Bank of Scotland NV [2010] NSWSC 584 (Biscoe AJ)

A plaintiff in representative proceedings under Uniform Civil Procedure Rules 2005 (UCPR) r 7.4 was unwilling to continue as the representative plaintiff but wished to remain as a member of the group. Another group member was willing to be substituted. The plaintiff and group member sought orders for the withdrawal of the plaintiff as a representative party and the substitution of the [page 361] group member as the new representative party. The defendant contended that the plaintiff could only cease to be a plaintiff if he discontinued his personal proceedings and relinquished his claims against the defendant. Biscoe AJ noted that there would have been no difficulty had the proceedings been conducted in the Federal Court, as ss 33W and 33T clearly empowered the court to substitute a representative party in the manner sought. However, the provisions of the UCPR provided a much less detailed legislative regime than Pt IVA. After a thorough examination of the provisions of the UCPR and the previous case law, Biscoe AJ rejected the defendant’s submissions and made the orders sought by the plaintiff and group member.

[page 363]

CHAPTER 24 Notice of Certain Matters: s 33X • OVERVIEW • The legislation distinguishes between notice of matters which must be brought to group members’ attention, and the form of that notice. Section 33X is concerned with the notice of matters which must be brought to group members’ attention, while s 33Y (Chapter 25) deals with the form and manner of providing that notice. While the court may dispense with the requirement to do so, s 33X provides that group members must be given notice of: (a) the commencement of the proceedings; (b) an application for dismissal of proceedings for want of prosecution; (c) an application by the representative party to settle their individual proceedings (s 33W) (Chapter 23); and (d) an application or court approval of a settlement of the representative proceeding (s 33V) (Chapter 22). As each of these matters will affect the rights of group members, it is important that group members are informed of these matters. Notice of these matters is an important feature of the representative proceeding regime. It is through the provision of notice of these matters that the regime seeks to protect the rights of individuals who will be affected by the representative proceeding even though they are not parties to it, and may never have given their consent to the pursuit of the proceedings.

• LEGISLATION •

Section 33X, Federal Court of Australia Act 1976 (Cth) Notice to be given of certain matters (1) Notice must be given to group members of the following matters in relation to a representative proceeding: (a) the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under subsection 33J(1); [page 364]

(2)

(3)

(4)

(5) (6)

(b) an application by the respondent in the proceeding for the dismissal of the proceeding on the ground of want of prosecution; (c) an application by a representative party seeking leave to withdraw under section 33W as representative party. The Court may dispense with compliance with any or all of the requirements of subsection (1) where the relief sought in a proceeding does not include any claim for damages. If the Court so orders, notice must be given to group members of the bringing into Court of money in answer to a cause of action on which a claim in the representative proceeding is founded. Unless the Court is satisfied that it is just to do so, an application for approval of a settlement under section 33V must not be determined unless notice has been given to group members. The Court may, at any stage, order that notice of any matter be given to a group member or group members. Notice under this section must be given as soon as practicable after the happening of the event to which the notice relates.

Section 33X, Supreme Court Act 1986 (Vic)

When notice to be given (1) Notice must be given to group members of the following matters in relation to a group proceeding— (a) the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under section 33J(1); (b) an application by the defendant for the dismissal of the proceeding on the ground of want of prosecution; (c) an application by the plaintiff seeking leave under section 33W. (2) The Court may dispense with compliance with any or all of the requirements of subsection (1) if the relief sought in a proceeding does not include any claim for damages. (3) If the Court so orders, notice must be given to group members of any offer to compromise the proceeding. (4) Unless the Court is satisfied that it is just to do so, an application for approval under section 33V must not be determined unless notice has been given to group members.

[page 365]

Section 175, Civil Procedure Act 2005 (NSW) Notice to be given of certain matters (1) Notice must be given to group members of the following matters in relation to representative proceedings: (a) the commencement of the proceedings and the right of the group members to opt out of the proceedings before a specified date, being the date fixed under section 162(1), (b) an application by the defendant in the proceedings for the dismissal of the proceedings on the ground of want of prosecution,

(2)

(3)

(4)

(5) (6)

(c) an application by a representative party seeking leave to withdraw under section 174 as representative party. The Court may dispense with compliance with any or all of the requirements of subsection (1) if the relief sought in the proceedings does not include any claim for damages. If the Court so orders, notice must be given to group members of the bringing into Court of money in answer to a cause of action on which a claim in the representative proceedings is founded. Unless the Court is satisfied that it is just to do so, an application for approval of a settlement under section 173 must not be determined unless notice has been given to group members. The Court may, at any stage, order that notice of any matter be given to a group member or group members. Notice under this section must be given as soon as practicable after the happening of the event to which it relates.

Section 103T, Civil Proceedings Act 2011 (Qld) When notice must be given (1) Notice must be given to group members of the following matters in relation to a representative proceeding— (a) the starting of the proceeding and the right of the group members to opt out of the proceeding before the date fixed by the court under section 103G; (b) an application by the defendant for the dismissal of the proceeding on the ground of want of prosecution; (c) an application by a representative party seeking leave to withdraw under section 103S as representative party. [page 366] (2) The court may dispense with a requirement of subsection (1) if the

(3)

(4)

(5) (6)

relief sought in the representative proceeding does not include a claim for damages. If the court orders, notice must be given to group members of the payment into court of money in answer to a cause of action on which a claim in the representative proceeding is based. Unless the court considers it just, an application for approval of a settlement under section 103R must not be decided unless notice has been given to group members in the representative proceeding. The court may, at any stage, order that notice of any matter be given to a group member or group members. Notice under this section must be given as soon as practicable after the happening of the event to which it relates.

• COMMENTARY • Purpose of ss 33X and 33Y 24.1 ‘The principal purpose of a notice under ss 33X or 33Y of the Act is to ensure that class members can make informed decisions concerning their rights’: Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98 at [88].

Purpose of Opt-out Notice 24.2 The purpose of a notice under s 33X(1)(a) is to inform group members of their right to opt out of the proceedings which is conferred by s 33J. Section 33X(1)(a), along with s 33Y, are the machinery provisions of the opt-out regime. ‘Clarity and simplicity are essential if an opt out notice is to have its intended effect’: Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98 at [88], citing King v GIO Australia Holdings Ltd [2001] FCA 270 at [14]–[16]. The form and manner of providing that notice is discussed in s 33Y

(Chapter 25). See also discussion in s 33J (Chapter 10) regarding the right to opt out of representative proceedings.

Effect of Amendment of Statement of Claim on Opt-out Notice 24.3 In King v GIO Australia Holdings Ltd [2001] FCA 1487, the court was concerned with whether the applicant should be given leave to further amend the statement of claim. In opposing that application, the respondents relied on the fact that the group members had already been sent an opt-out notice pursuant to s 33X(1)(a). The respondents argued that those to whom the notice had been sent may have made decisions to opt out or not based on the case as it was then pleaded. [page 367] Moore J observed that if there was a real possibility that decisions were made on the basis of the notice under s 33X(1)(a) then either leave to amend should not be given, or s 33X(5) could be used to deal with the effect of the grant of leave as a concurrent procedural step. That is, a further optout notice could be sent to group members giving them another opportunity to opt out of the proceedings based on a review of the new pleading. However, in this case, Moore J found that the changes and their effect did not materially alter the case and was unlikely to affect the decisions of group members about opting out of the proceedings. The fact that the form of pleading may change following the opt-out notice being published will not always operate as a reason to delay the publication of the opt-out notice: see Oztech Pty Ltd v Public Trustee of Queensland [2015] FCA 1010.

Notice in Closed Class Proceedings 24.4 The court may exercise its discretion to dispense with the notice requirements in s 33X(1)(a). In doing so, it will typically rely on the plenary

power conferred by s 33ZF, as s 33X(2) only allows for compliance to be dispensed with where the relief sought does not include a claim for damages. In Vernon v Village Life [2009] FCA 516, Jacobson J considered whether the court should exercise its discretion to dispense with the opt-out notice requirement in s 33X(1)(a). The issue arose somewhat unusually in the context of an application to approve a settlement of the representative proceedings. The group members had all entered into a litigation funding agreement and retained Slater & Gordon. The proceeding was therefore a ‘closed class’ representative proceeding where all group members were known. Jacobson J held (at [68]–[69]): It seems to me that there are a number of reasons why I ought to exercise the discretion to dispense with compliance with the opt-out requirements stated in ss 33J and 33X(1)(a). In essence, this is because group members have been notified on at least two occasions of their right to opt out, and they have been invited on both of those occasions in the letters from Slater & Gordon to indicate whether, if given the opportunity to do so, they would wish to exercise their entitlement to opt out. As I have said on several occasions, no group member has indicated any wish to do so. I would also take into account the cost of providing a further notice to group members which would have to be borne by the applicants. Not only would there be the cost of any mail-out, there would be further costs involved because I would need to adjourn the hearing of this application pending the dispatch of opt-out notices and the receipt of any responses from group members. In light of what has already taken place, this would seem to be a futile exercise.

Section 33X(1)(b) — Want of Prosecution 24.5 In Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388, the court considered the notice requirement in s 33X(1)(b). In that case, against a complex procedural history, an order was made that if a defective statement of claim was [page 368] not rectified by a particular date, it would be struck out. The applicant complained that if such a ‘self-executing’ order was to be made, there should have been advertising of the respondent’s intention to apply for it. Kenny J

considered that, pursuant to s 33X(1)(b), notice must be given to group members of an application by a respondent in a representative proceeding for the dismissal of a proceeding on the ground of want of prosecution. Her Honour noted (at [17]): Presumably, there is this notice requirement because the application, if successful, might prejudice the rights of group members. For example, some group members might have causes of action that could be adversely affected by limitation of actions provisions if the representative proceeding was determined without any notice to them.

Kenny J observed that while the provisions of the Act did not make notice a prerequisite to an application for a self-executing order, it fell within the scope of consideration of the provision in s 33X(5) for the court to order that notice of any matter be given to group members at any stage of the proceedings. To that end, her Honour noted that, generally speaking, a selfexecuting order should not be made in a representative proceeding unless the court has first considered whether notice should be given to group members, either of the respondent’s application or of any self-executing order to be made, or otherwise: at [17].

Section 33X(1)(c) — Application for Leave to Withdraw as Representative Party 24.6

See the discussion in s 33W (Chapter 23).

Section 33X(2) — Dispensing with Notice Requirements 24.7 Section 33X(2) qualifies s 33X(1) by empowering the court to dispense with all or any of the requirements of that subsection where the relief sought in a proceeding does not include a claim for damages. In exercising the discretion, the court is bound to have regard to the purpose for which the discretion is conferred, and to that end, to take account of the terms and subject matter of Pt IVA: see Femcare Ltd v Bright (2000) 100 FCR 331 at [67]. A court exercising discretion based on a lack of a claim for damages will take into account the consequences for a group member of being bound by an adverse determination. In cases where the declaratory relief has

significant consequences for group members, for example where declaratory relief is sought as to the interpretation of an important contractual provision, a court is far less likely to dispense with the notice requirement: see Femcare Ltd v Bright at [68]. 24.8 The court rejected an application to exercise the power to dispense with the notice requirements in Schanka v Employment National (Administration) Pty Ltd [1999] FCA 1812, which was a case involving the validity of Australian Workplace Agreements (AWAs) in light of alleged duress exercised by Employment National [page 369] (Administration) (ENA) upon employees to enter into them. Counsel for ENA submitted that the notice requirement should be disposed of because of an ‘adverse impact’ on the stable industrial relations within ENA if notice was to be given. Moore J found that, given proceedings had been on foot for over 18 months, the reasons given by counsel for ENA were insufficient to justify dispensing with the notice requirements.

Section 33X(4) — Approval of Settlement Notice 24.9 Section 33X(4) permits the court to dispense with the requirement for notice to be given to all group members of an application for approval of settlement where it is just to do so. The provision has only been deployed in limited cases, with unique circumstances. For example, in Blairgowrie Trading Ltd v Allco Finance Group Ltd (recrs & mgrs apptd) (in liq) (2015) 325 ALR 539, Wigney J dispensed with the need to provide notice of a settlement reached with the estate of Mr Coe, who was one of the respondents. In simple terms, the effect of that settlement was that the proceeding against Mr Coe’s estate would be discontinued. The logic behind this settlement was clear (at [5]): Mr Coe is deceased and his estate is insolvent. Both Allco and Mr Coe are insured in respect of the claims made against them in this proceeding under a series of insurance policies with a

combined value of $150 million. Mr Coe does not have any separate insurance. Any recovery against Allco and Mr Coe’s estate will come from the same pool of insurance funds.

Wigney J decided it was just to dispense with the requirement under s 33X that group members be provided with notice of settlement where provision of notice is likely to be costly and lengthy and settlement is plainly in the interests of the group members as whole (at [9]): In the somewhat unique circumstances of this case, I am satisfied that it is just to dispense with the requirement to notify group members of the application for approval of the settlement. The time consuming and expensive process of giving notice to the large number of group members in these proceedings is not warranted. That is essentially because it is difficult, if not impossible, to identify any reasonable or legitimate argument that could be advanced by any group member in opposition to the settlement. The settlement arrived at with Mr Coe’s estate is plainly to the advantage of the group members as a whole, and does not prejudice any group member or class of group members.

24.10 Another example of this occurred in Crawford v Bank of Western Australia Ltd [2005] FCA 949, where the applicant’s solicitors represented all of the group members who were all members of a finite class, and the solicitors had provided separate advice to each group member about the benefits and consequences of the settlement. In that case, Lee J was satisfied that all group members had been duly [page 370] appraised of the relevant matters in making their decision to settle the proceeding and did not require further notice to be provided. 24.11 However, in Georgiou v Old England Hotel Pty Ltd [2006] FCA 705, an application for leave to dispense with the notice requirement was refused by Young J. In that case, the proposed settlement agreement functioned by permitting group members to return claim forms in order to access the settlement. It was submitted that if group members would receive notice of the settlement when they received the claim form and if they did not want to be bound by the settlement, they could elect not to return the claim form and in that way they would not take part in the settlement process. Counsel for the respondent argued that notice of the proposed settlement should be

disposed of due to the expensive cost of advertising not being warranted, and having regard to the process for settlement, group members had an ‘opportunity to immunise themselves from the effects of the settlement agreement’ if they so required: at [8]. Young J refused to dispense with the notice requirement, because ‘group members may wish to raise issues concerning form, content and finality of the proposed settlement arrangement’ before the court approved it, and ordered publication of notices in several newspapers.

Section 33X(5) — Any Other Matter 24.12 Section 33X(5) gives the court power to order a notice be given to group members at any stage of the proceedings. If a deficiency emerges in notice that has been given to group members, then s 33X(5) would ‘confer sufficient power upon the court to order any such deficiency to be the subject of a further notice’: Pharma-a-Care Laboratories v Commonwealth (No 6) [2011] FCA 277. However, while s 33X(5) can remedy deficiencies it is not an excuse for poor drafting. It is ‘incumbent upon all parties to a proceeding to provide as much assistance to the court as is possible when approving the form of the notice’: Pharma-aCare Laboratories v Commonwealth (No 6). 24.13 A notice was issued pursuant to s 33X(5) in Williams v FAI Home Security Pty Ltd (No 3) [2000] FCA 1438 to correct inaccurate public statements made by the respondents about the status of the proceeding and the applicant’s solicitors. In that case, the respondents argued that the optout notice would correct any misapprehension that the statements may have triggered in group members. Goldberg J held (at [24]): … the nature of class actions brought pursuant to provisions of Part IVA of the Act are such that it is imperative that any communications made to group members, in whatever form, be accurate, especially in relation to the rights which they have in relation to class actions of which they are a member and the rights which they have to opt out of such proceedings.

Therefore, the respondents were ordered to correct the incorrect statements before group members were sent an opt-out notice. Goldberg J held that the

[page 371] jurisdiction of the court to make such an order derived from s 33X(5) and s 33ZF(1). Similar facts arose in Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2008] FCA 575, where the solicitors for the applicant made misleading statements to the public about the value of the proceedings. Tamberlin J made an order that a correction notice be issued to group members, citing the reasoning of Goldberg J in Williams v FAI Home Security Pty Ltd (No 3), and finding that the power of the court to make such an order pursuant to ss 23, 33J, 33K and 33X was ‘not contentious’. 24.14 In Schanka v Employment National (Administration) Pty Ltd (2001) 114 FCR 379, a case which involved alleged duress applied by ENA to the lead applicants to enter into AWAs, it was in issue whether the proceedings were competent to continue as a representative proceeding. The applicants sought an order that a notice be sent to group members under Federal Court of Australia Act 1976 (Cth) (Federal Court Act) s 33X(5). The applicants proposed that the notice inform the other group members of the reasons for judgment in the proceedings and invite them to make submissions about the further conduct of the representative proceeding before orders were made relating to the named applicants. Moore J found that inviting group members whose claims were not made out to make submissions about the further conduct of the representative proceeding was an inappropriate use of s 33X(5). His Honour found that the appropriate order concerning the group members in relation to whom a claim had not been made out was that the proceedings be otherwise dismissed: at [17].

• CASE LAW • 24.15

Crawford v Bank of Western Australia Ltd [2005] FCA 949 (Lee J)

Crawford v Bank of Western Australia Ltd [2005] FCA 949 concerned an application for approval of the proposed settlement of a representative proceeding. The class represented by the applicant in the proceeding was finite and all members of the class were represented by the solicitors for the applicant. The solicitors provided separate advice to each group member about the benefits and consequences of the settlement and a written agreement detailing the terms of the proposed settlement was executed by the applicant and all other group members. In these circumstances, Lee J considered it appropriate to dispense with the requirement for further notice of the application to be given under s 33X(4). His Honour was satisfied that all group members had been duly appraised of the relevant matters in making their decision to settle the proceeding and considered it unnecessary to require further notice to be provided. [page 372]

24.16

Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 (Young J)

In Georgiou v Old England Hotel Pty Ltd [2006] FCA 705, the applicant sought to dispense with the requirement imposed by s 33X(4) to give notice of an application for approval of settlement. Counsel for the applicant submitted two principal reasons as to why it was appropriate in the present case to approve the proposed settlement, notwithstanding that notice had not been given to group members. First, it was argued that the high cost of advertising was not warranted in the circumstances. Second, it was submitted that the particular form of the proposed settlement agreement rendered the notice requirement unnecessary. The proposed agreement required group members to complete and return claim forms in order to access the settlement. This process ostensibly functioned as a form of notice and substantially if not wholly achieved the objective of the notice requirement in s 33X(4), which is designed to ensure that group members are not bound by a settlement agreement of which they

were not aware or to which they had no opportunity to express objection. Counsel argued further that the case lacked an ‘element of compromise’; that is, the proposed settlement agreement stipulated in full the process for assessing each group member’s claim rather than simply specifying a lump sum to be distributed in a way that reduced the value of individual claims. Young J was not persuaded to dispense with the notice requirement on the basis that his Honour was ‘conscious that group members may wish to raise issues concerning the form, content and finality of the proposed settlement arrangement’ before the court approved it: at [10]. In approving the proposed settlement, Young J ordered publication of notices in several newspapers.

24.17

King v GIO Australia Holdings Ltd [2001] FCA 1487 (Moore J)

The King v GIO Australia Holdings Ltd proceedings were class action proceedings which arose from the hostile takeover of GIO Australia Holdings Ltd (GIO) by AMP Insurance Investment Holdings Pty Ltd. The applicant alleged that during the takeover, the conduct of the respondents which led the applicant and group members to retain their shares in GIO and consequently suffer loss amounted to misleading and deceptive conduct. In Moore J’s 24 October 2001 judgment (forming part of the long-running representative proceeding), his Honour considered whether to approve an application for leave to amend the statement of claim in circumstances where potential group members had already been sent a notice pursuant to s 33X(1)(a) to opt out of proceedings by reference to the group identified in the existing statement of claim. It was argued on behalf of the respondents that those group members to whom the notice was sent may have made decisions about whether to opt out on the basis of the case as it was then pleaded and that this possibility precluded the grant of leave to amend the statement of claim. [page 373]

Moore J dismissed this possibility as a theoretical one: at [9]. His Honour observed that ‘one cannot say with absolute certainty why decisions were taken by each of the recipients of the notice’: at [9]. In any case, Moore J did not accept that the proposed alterations had any material impact on the nature of the case as formulated in the existing statement of claim and it was unlikely that different decisions would have been made by the recipients: at [7].

24.18

Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 (Kenny J)

The applicants in Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 commenced a representative proceeding in which they alleged that they and the group members had suffered loss as a result of purchasing or acquiring a right to immediate possession of an allegedly defective Mack truck. Relevantly, a ‘self-executing order’ was made such that, if the applicants did not rectify deficiencies in their statement of claim by filing an amended statement of claim by a certain date, the application would be dismissed. The applicants argued, pursuant to s 33X(1)(b), that such an order should not be made in the absence of advertising of the respondent’s intention to apply for it. Kenny J considered that, pursuant to s 33X(1)(b), notice must be given to group members of an application by a respondent in a representative proceeding for the dismissal of a proceeding on the ground of want of prosecution. His Honour thought it relevant that a limitation period will run again where the proceeding is determined without finally disposing of a group member’s claim. In these circumstances, notice is necessary to protect the rights of those group members whose causes of action might have been statute-barred or otherwise adversely affected on the determination of the representative proceeding. His Honour noted (at [17]): Presumably, there is this notice requirement because the application, if successful, might prejudice the rights of group members. For example, some group members might have causes of action that could be adversely affected by limitation of actions provisions if the representative proceeding was determined without any notice to them.

Notwithstanding that the representative proceeding provisions of the Act do not stipulate that notice is a prerequisite to an application for a selfexecuting order, Kenny J considered that self-executing orders fell within the scope of consideration of the provision in s 33X(5) for the court to order that notice of any matter be given to group members at any stage of the proceedings. His Honour observed that, generally speaking, a self-executing order should not be made in a representative proceeding unless the court has first considered whether notice should be given to group members: at [17]. [page 374]

24.19

Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 6) [2011] FCA 277 (Flick J)

Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 6) [2011] FCA 277 formed part of a long-running representative proceeding. In Flick J’s 25 March 2011 judgment, his Honour gave considerable attention to the form and content of a notice given to group members under s 33X(4) of an application for approval of a settlement. Following a number of contested interlocutory applications, an offer of settlement emerged which extended to the settlement of both this proceeding and a proceeding commenced in the Supreme Court of New South Wales. Against this complex procedural history, Flick J considered the principles to be applied in drafting an initial notice to group members informing them of the proposed settlement in order to facilitate the approval of that settlement pursuant to s 33V. 24.20 Flick J observed that if a deficiency emerges in a notice that has been given to group members, then s 33X(5) would ‘confer sufficient power upon the court to order any such deficiency to be the subject of a further notice’: at [10]. However, while s 33X(5) can remedy deficiencies it is not an excuse for poor drafting, and it has been held that any notice should be properly drafted at the outset, serving the purpose sought to be achieved by s

33X(4). Namely, it is ‘incumbent upon all parties to a proceeding to provide as much assistance to the court as is possible when approving the form of the notice’: at [10]. This encompasses a duty that the notice be both accurate and expressed in as plain and simple language as possible: at [9]. As to the content of the group notice, Flick J considered it of importance to provide notice of the quantum of the offer, the amount that would be available for distribution between group members, the manner in which moneys were to be distributed, as well as the date upon which the application was to be made to the court for approval of the proposed settlement: at [14]–[15]. His Honour also considered it necessary that the notice should expressly inform group members of the need to make a claim if the settlement was approved: at [15].

24.21

Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539 (Wigney J)

Wigney J dispensed with the need to provide notice of a settlement reached with the estate of Mr Coe, who was one of the respondents. In simple terms, the effect of that settlement was that the proceeding against Mr Coe’s estate would be discontinued. The logic behind this settlement was clear (at [5]): Mr Coe is deceased and his estate is insolvent. Both Allco and Mr Coe are insured in respect of the claims made against them in this proceeding under a series of insurance policies with a combined value of $150 million. Mr Coe

[page 375] does not have any separate insurance. Any recovery against Allco and Mr Coe’s estate will come from the same pool of insurance funds.

Wigney J decided it was just to dispense with the requirement under s 33X that group members be provided with notice of settlement where provision of notice is likely to be costly and lengthy and settlement is plainly in the interests of the group members as whole (at [9]):

In the somewhat unique circumstances of this case, I am satisfied that it is just to dispense with the requirement to notify group members of the application for approval of the settlement. The time consuming and expensive process of giving notice to the large number of group members in these proceedings is not warranted. That is essentially because it is difficult, if not impossible, to identify any reasonable or legitimate argument that could be advanced by any group member in opposition to the settlement. The settlement arrived at with Mr Coe’s estate is plainly to the advantage of the group members as a whole, and does not prejudice any group member or class of group members.

[page 377]

CHAPTER 25 Notices: s 33Y • OVERVIEW • Section 33Y is concerned with notices under s 33X (Chapter 24), and therefore these two sections should be read together. Section 33Y is the machinery provision which outlines the form, content and method of notices to be given to group members. The manner in which that notice is to be given will depend on the circumstances of each case and the issue about which notice is being given. In some instances, it may be appropriate for notice to be given via press advertisements or radio and television broadcasts. In other circumstances, the court may decide that it is reasonably practicable and not unduly expensive to order that notices be given personally. In more recent times, the courts have also considered using social media to publish notices.

• LEGISLATION • Section 33Y, Federal Court of Australia Act 1976 (Cth) Notices—ancillary provisions (1) This section is concerned with notices under section 33X. (2) The form and content of a notice must be as approved by the Court. (3) The Court must, by order, specify: (a) who is to give the notice; and (b) the way in which the notice is to be given;

and the order may include provision: (c) directing a party to provide information relevant to the giving of the notice; and (d) relating to the costs of notice. (4) An order under subsection (3) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means. (5) The Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so. [page 378] (6) A notice that concerns a matter for which the Court’s leave or approval is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter. (7) A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance. (8) The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.

Section 33Y, Supreme Court Act 1986 (Vic) Notices under section 33X (1) The form and content of a notice under section 33X must be approved by the Court. (2) The Court must, by order, specify— (a) who is to give the notice; and (b) the manner in which the notice is to be given—

and the order may include provision— (c) directing a party to provide information relevant to the giving of the notice; and (d) relating to the costs of notice. (3) An order under subsection (2) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means. (4) The Court must not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so. (5) A notice that concerns a matter for which the Court’s leave is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter. (6) A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance. (7) The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.

[page 379]

Section 176, Civil Procedure Act 2005 (NSW) Notices under section 175 (1) The form and content of a notice under section 175 must be approved by the Court. (2) The Court must, by order, specify: (a) who is to give the notice, and (b) the way in which the notice is to be given. (3) An order under subsection (2) may also include provision:

(4)

(5)

(6)

(7) (8)

(a) directing a party to provide information relevant to the giving of the notice, and (b) relating to the costs of giving notice. An order under subsection (2) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means. The Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so. A notice that concerns a matter for which the Court’s leave or approval is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter. A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance. The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in any proceedings.

Section 103U, Civil Proceedings Act 2011 (Qld) Notices requirements (1) The form and content of a notice under section 103T must be approved by the court. (2) The court must, by order, state— (a) who must give the notice; and (b) the way in which the notice must be given. [page 380] (3) The order may also—

(4)

(5)

(6)

(7) (8)

(a) direct a party to provide information relevant to the giving of the notice; and (b) provide for the costs of giving notice. An order under subsection (2) may require notice to be given by way of press advertisement, radio or television broadcast, or any other means. The court must not order that notice be given personally to each group member unless it considers it is reasonably practicable and not unduly expensive to do so. A notice about a matter for which the court’s leave or approval is required must state the period within which a group member or other person may apply to the court, or take some other step, in relation to the matter. A notice that includes or is about conditions must state the conditions and period, if any, for compliance. The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given in the representative proceeding.

• COMMENTARY • 25.1 Section 33Y is concerned with notices under s 33X; that is, notice concerning: (a) the commencement of the proceedings; (b) an application for dismissal of proceedings for want of prosecution; (c) an application by the lead applicant to settle their individual proceedings: s 33W; (d) an application or court approval of a settlement of the representative proceeding: s 33V. In Femcare Ltd v Bright (2000) 100 FCR 331 (Femcare), the Full Court commented (at [69]):

Section 33Y(1) says that s 33Y is concerned with ‘notices under section 33X’. In a sense this language is curious, since s 33X is not concerned with notices as such, but with the giving of notice. In any event, s 33Y(2) requires the form and content of a notice to be approved by the Court …

25.2 The purpose of the provision is finding the most economical means of ensuring group members are informed of the proceedings and their rights. The [page 381] Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’, Report 46 (1988) explained (at [190]): The principal applicant is the most obvious person to give notice to group members. There may, however, be circumstances where it is easier and less costly for the respondent to give notice. The Court should have the flexibility to order that any party give notice. There are many possible ways of notifying group members, including: individual notice by mail; notice by publication in newspapers, magazines, journals; notice by broadcast on television or radio; posting notice on a bulletin board, for example at a place of employment or club. The most appropriate and cost effective method of notice will depend on the circumstances of the case. The objective should be to find the most economical means of ensuring that the group members are informed of the proceedings and of their rights. The more at stake for each person, the more effective the notice should be. Individual notice is likely to be the most effective method of giving notice but it is also likely to be the most costly … The costs of such a requirement may be out of all proportion to its benefits to group members; in some circumstances the requirement of individual notice could prevent them from obtaining a remedy.

Section 33Y also specifies that a failure of a group member to receive or respond to a notice does not affect any step taken in the proceeding, or any order of judgment in the proceedings. There are no significant differences between Federal Court of Australia Act 1976 (Federal Court Act) s 33Y and the equivalent Victorian, New South Wales and Queensland provisions.

Section 33Y(2) — Court Must Approve Form and Content of Notice 25.3 The form and content of a notice must be approved by the court. The principal purpose of giving a notice is to ensure that all group members can make an informed decision regarding their rights. As a result, the court will need to ensure that the notice is clear and simple. The task of the court was summarised by Flick J in Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4) [2010] FCA 749 at [23]: In summary form, and subject to the power of the Court to dispense with requirements otherwise imposed, the task of the Court when approving the form and content of a notice pursuant to s 33Y(2) is to ensure that the notice: contains such information as has been prescribed by the Legislature in the Federal Court Act;

[page 382] complies with Practice Note CM 17, except where a departure from the ‘sample form’ set forth in that Practice Note is considered appropriate; sets forth that information in a manner which is as readily understandable to those to whom it is addressed as is possible in the circumstances of any individual proceeding; sets forth that information in a manner which is not misleading; and sets forth that information in a manner which is otherwise appropriate to promote the object and purpose for which it is being given.

25.4 It is ‘imperative that any communications made to group members … be accurate’: Williams v FAI Home Security Pty Ltd (No 3) [2000] FCA 1438 at [24] per Goldberg J. The need for any notice to be clear and easy to understand was a recommendation made by the Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [195]: The Notice should contain basic information sufficient to enable group members to exercise their rights in relation to the proceedings. It is important that the contents of any notice be clear and easy to understand. Where the notice concerns a matter for which the Court’s

leave or approval is required, it must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter …

25.5 The court has also recognised that receipt of an opt-out notice may cause some concern to group members. In Courtney v Medtel [2001] FCA 1037, Sackville J made the following observation in the context of a representative proceeding brought on behalf of group members who had been implanted with a particular pacemaker (at [11]): Any opt-out notice should be framed so as not to cause unnecessary alarm or distress to intended recipients. Practising lawyers, and for that matter judges, may tend to underestimate the impact that publication or service of a Court ordered notice may have on members of the represented group. The recipients of a notice under s 33X of the Federal Court Act may become anxious when they learn for the first time of legal proceedings which may affect their legal rights and in respect of which they must decide whether or not to participate. They may be concerned by technical language that is difficult to understand. The notice may also alert them, particularly in personal injury cases, to the possibility that they are at risk of future harm. People who are at risk of harm or who are otherwise vulnerable, such as elderly persons, may be particularly susceptible to anxiety or distress. Notices must be accurate but should be drafted with sensitivity to these considerations.

These observations were referred to by Flick J in Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4), who made a further observation (at [20]– [21]): [page 383] It is, accordingly, of importance to ensure that a notice does not contain unnecessary information which may simply have the potential to either confuse or intimidate the persons to whom it is addressed. The nature of the information being communicated may well depend upon the issues being advanced for resolution in the representative proceeding itself — the more complex a proceeding may be, the greater may be the need to include more rather than less information. Inevitably a balance may have to be struck when approval is sought in respect to each individual proceeding. As was also observed by Sackville J in Courtney, when approving the form and content of an opt-out notice, consideration should also be given to the category of persons who are group members. What may be an appropriate manner in which to convey information to group members better qualified to understand that information may be inappropriate (and may have to be differently expressed) where it may be expected that group members are less able to understand the information sought to be conveyed. There would be little point in

expressing an opt-out notice in terms which a lawyer may well understand but in terms totally confusing to the intended recipient.

See also the consideration given the group member circumstances in McAlister v New South Wales (No 2) [2017] FCA 93.

Practice Notice Guidance 25.6 The Federal Court Class Actions Practice Note (GPN-CA) provides the following guidance about the opt-out notice: 11. OPT OUT NOTICE 11.1 Class members may opt out of a class action by giving a written opt out notice to the Court by a date which must be fixed for that purpose by the Court (see s 33J of the Federal Court Act). An opt out notice must comply with Form 21 (see r 9.34 of the Federal Court Rules). 11.2 The applicant’s lawyers should ensure that the opt out notice: (a) uses plain language and gives a balanced, succinct description of the claims and defences in the proceeding; (b) clearly describes the consequences of remaining a class member or alternatively opting out of the proceeding, including a succinct explanation of how a judgment or settlement in the proceeding will or may preclude class members from relying on the same or related claims or defences in other proceedings; (c) alerts class members to the fact and consequences of any costs agreement or litigation funding agreement made or intended for the proceeding; (d) is sent, published or broadcast via media which are best calculated to achieve the effective dissemination of the notices among class members in the most costeffective way.

[page 384] A sample form of such an opt out notice is available on the Court’s website. It may be appropriate in some cases to use a shorter form of notice. 11.3 Where the class members are, or are likely to be, identifiable from a respondent’s records (for example, shareholders of a respondent corporation or unitholders in a managed investment scheme) then the parties should, subject to any clear statutory or legal obligations requiring otherwise, cooperate with a view to using the respondent’s records as the basis for a direct mail or email distribution of notices, whether by the applicant, by the respondent or by a third party (for example, a commercial mail house).

11.4 An objection to the use of the respondent’s records to assist the opt out process in this way must be advised by the respondent to the applicant’s lawyer at the earliest practicable opportunity. The parties should engage in a genuine effort to resolve the issue in a practical way before agitating the issue before the Court. 11.5 The Court will approve an appropriate manner of distribution of the notice to be given to class members informing them of the commencement of the class action, and of their right to opt out of the proceeding by the date that the Court has fixed (see ss 33X(1) (a), 33X(2) and 33Y of the Federal Court Act). 11.6 The timing of the opt out notice to class members is a matter to be dealt with at a case management hearing.

Guidance in other jurisdictions is provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [9]; the Supreme Court of New South Wales Practice Note SC Gen 17 — Supreme Court Representative Proceedings at [8.2]; and the Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings at [9.2].

Timing of Notice 25.7 The Federal Court Class Actions Practice Note (GPN-CA) states that the timing and form of an opt-out notice is a matter to be discussed at subsequent case management hearings: see [8.2]. This is to be contrasted with the former Practice Note CM17 which stated that the timing and form of the opt-out notice was something that should be discussed at the initial case management conference. This change reflects the reality that the issues arising in class action litigation are becoming more complex, which means that courts are generally publishing an opt-out notice at a later date once interlocutory issues have been considered. 25.8 Similar guidance is provided in the Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) at [5.9]; the Supreme Court of New South Wales Practice Note SC Gen 17 — Supreme Court Representative Proceedings at [8.1] and the Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings at [9].

[page 385] 25.9 However, the fact that the form of pleading may change following the opt-out notice being published will not always operate as a reason to delay the publication of the opt-out notice: see Oztech Pty Ltd v Public Trustee of Queensland [2015] FCA 1010. 25.10 In Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4), Flick J made the following observations (at [18]): Section 33X(1)(a), it will be noted, does not make express provision for the point of time at which the notice required by that provision is to be given. That point of time will be dictated by the facts and circumstances of each individual proceeding. Where amendments to the causes of actions being advanced for resolution are being contemplated, or where the very definition of the ‘group members’ may itself change, it may be appropriate to defer the giving of any notice until those matters have been resolved. It may also be appropriate to defer the giving of any notice until after any Notices of Motion seeking to have a proceeding stayed or dismissed are resolved. To do so may limit the extent to which further notices to group members may be required.

See also the constraint imposed by s 33J(4) (Chapter 10).

Costs 25.11 One reason why the opt-out notice required to be given under s 33X must be approved by the court under s 33Y is to ensure that group members are given such information as is appropriate and necessary to enable them to make an informed decision whether to opt out of the proceeding. For example, group members can expect that a group proceeding conducted on their behalf will not leave them liable for costs merely because they are group members; however, if this changes, the opt-out notice should adequately inform group members of their prospective liability. Informing group members of their prospective liability for costs is difficult. It is difficult to summarise that liability in a manner that is ‘readily comprehensible and clear’ and not ‘obscured by matters of detail’ but also not misleading. 25.12

Where a case is funded by a litigation funder, the opt-out notice

should alert class members to the fact and consequences of any costs agreement including any litigation funding agreement: see Federal Court Class Actions Practice Note (GPN-CA) at [11.2(c)]. 25.13 Where there is, or may be, an application for a common fund (see discussion in Chapter 32) the Full Court of the Federal Court of Australia has said (at [13]): … we contemplate that before class members are required to choose whether or not to opt out, they will be informed of the proposed orders and the fact that they will have deducted from any settlement or judgment a reasonable funding

[page 386] commission at a Court-approved rate. If class members are concerned about an obligation to pay a reasonable Court-approved funding commission, they can opt out of the proceeding and bring their own case (either individually or collectively) with or without other funding arrangements.

25.14 In King v GIO Australia Holdings Ltd [2000] FCA 1869, Moore J found that the fee and retainer agreement in question was too difficult to summarise without resulting in an overly complex summary or one that failed to deal with the intricate arrangement in a simple and straightforward way. His Honour held that (at [15]): … if the notice is to say anything about costs then it should outline as simply as possible what the potential liability of a group member is in relation to costs which should probably also involve a discussion about how a group member might be represented if, at a point in the proceedings, proof of individual reliance and loss is necessary.

Ultimately, the notice approved by Moore J dealt only with the important legal consequences of the group member being bound by the judgment if they did not opt out of the proceedings. 25.15 On appeal to the Full Federal Court in King v GIO Australia Holdings [2001] FCA 270 (Sackville, Hely and Stone JJ), the court found that the notice in the form prescribed by Moore J was capable of creating a misleading impression by failing to mention costs arrangements (at [14]– [15]):

In our opinion, the notice in its current form is capable of creating a misleading impression in group members who receive it. In particular, they may be led to believe that MBC will act on behalf of the applicant, insofar as he seeks damages and other relief on behalf of group members, to the point of judgment. This impression would not be accurate, since MBC will act on behalf of a group member to establish the individual elements of his or her cause of action (notably reliance, causation and loss or damages) only if that group member enters into a Fee and Retainer Agreement. In other words, in the absence of a global settlement approved by the Court, an individual group member cannot obtain a favourable judgment without engaging a lawyer or representing himself or herself. This misleading impression might well affect the decision of a group member whether or not to opt out of the proceedings. The principal purpose of the notice given under ss 33X(1)(a) and 33Y(2) is to ensure that group members can make an informed decision concerning their rights: see Law Reform Commission, Grouped Proceedings in the Federal Court (Report No 46, 1988), pars 188, 190; Femcare Ltd v Bright [2000] FCA 512; (2000) 100 FCR 331, at 336– 337, 349. We do not think it is an answer, as Mr Burnside QC (who appeared with Ms Hanscombe for the applicant) suggested it was, that a group member who is misled by the form of notice approved by the Court could apply for and expect to receive an extension of the period during

[page 387] which he or she can opt out of the representative proceeding: s 33J(3). The represented group is large and group members are likely to have widely varying degrees of understanding of the claims made on their behalf and the possible outcomes of representative proceedings. It is important that any decision they make concerning opting out of the proceedings not be based on a notice that is apt to mislead them.

In order to remedy this misleading impression, the court ordered that, pursuant to s 33X(5), group members should be informed that unless proceedings are settled, group members would not be represented by the applicant law firm unless the individuals assumed responsibility for their own legal fees. The court rejected an argument that a group member who was misled by the form of notice approved by the court could apply for and expect to receive an extension of the period during which he or she could opt out of the representative proceeding.

Section 33Y(3) — Specifications by the Court 25.16

The court must, by order, specify:

(a) who is to give the notice; and (b) the way in which the notice is to be given. The court also has the discretion to order that the notice include a provision: (a) directing a party to provide information relevant to the giving of the notice; and (b) relating to the costs of notice. 25.17 An effect of s 33Y(3)(a) is that the principal applicant is not always the one that will be required to send the notices. This was an intended effect, as evidenced in the ALRC Report at [190]: The principal applicant is the most obvious person to give notice to group members. There may, however, be circumstances where it is easier and less costly for the respondent to give notice. The Court should have the flexibility to order that any party give notice.

The court’s power to order the method of notice (s 33Y(3)(b)) was also recommended by the ALRC Report, where it stated that the most appropriate and cost-effective method of notice would depend entirely on the circumstances of the case. The Report noted that the court’s objective should be to find the most economical means of ensuring that the group members are informed of the proceedings and of their rights. The purpose of s 33Y(3)(c) is also to ensure that the easiest and cost-effective means of notifying group members is utilised. The principal applicant will often be the one who most easily identifies the group members. However, sometimes the respondent would be the more obvious choice. The ALRC Report explained this in the following terms (at [193]): [page 388] In some cases the principal applicant will be able to identify and notify group members relatively easily. In other cases, the respondent will be able to identify members of the group from his or her own records. This would be the case where, for example, a claim was made that an electricity authority had overcharged its customers. The names and addresses of the customers would be known to the respondent and notice could be given when the next bill was sent out. This would be the easiest and cheapest means of notifying the group members of their rights in this situation.

Guidance is now provided in the Federal Court Class Actions Practice Note (GPN-CA), which states: 11.3 Where the class members are, or are likely to be, identifiable from a respondent’s records (for example, shareholders of a respondent corporation or unitholders in a managed investment scheme) then the parties should, subject to any clear statutory or legal obligations requiring otherwise, cooperate with a view to using the respondent’s records as the basis for a direct mail or email distribution of notices, whether by the applicant, by the respondent or by a third party (for example, a commercial mail house). 11.4 An objection to the use of the respondent’s records to assist the opt out process in this way must be advised by the respondent to the applicant’s lawyer at the earliest practicable opportunity. The parties should engage in a genuine effort to resolve the issue in a practical way before agitating the issue before the Court.

Costs of Publishing the Notice 25.18 Given that the costs of providing notice may be very high, s 33Y(3) (d) provides the court with the discretion to make an order relating to the costs of the notice. The court has broad power to determine who, and in what circumstances, costs will be met. As stated in the ALRC Report (at [191]): The costs of notice may be very high even where individual notice is not ordered. Those could be treated as any other disbursement to be paid for at the time by the principal applicant and reimbursed by the respondent if the case is successful and an order for costs is made. However, because notice may be given more easily by the respondent in some cases it may be appropriate for the respondent to bear those costs either absolutely or as costs in the cause. The Court should have specific power to determine how the cost of notice are to be met.

However, while the court has discretion, the usual practice is that the costs of issuing notice are borne by the lead applicant. In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2001] VSC 284, Gillard J rejected an application for a defendant to bear the costs of publishing an optout notice and noted that Merkel J had adopted a similar position in related Federal Court proceedings: at [14]. His Honour then noted (at [17]–[19]): [page 389]

When a litigant issues proceedings in any Court, the litigant has the carriage of the proceeding and is obliged to pay all fees and expenses incurred in relation to that piece of litigation, until an order is made requiring a party to pay any costs. … Here, the Act clearly gives the power to the Court and the question is, under what circumstances should it be exercised? … The general rule, in my opinion, must be, that the costs incurred in giving notice be borne by those instituting and prosecuting the litigation. The general rule should be applied, unless special circumstances are established, justifying a departure from that rule.

See also Esposito v Commonwealth [2015] FCA 3 at [6] (order 12); Courtney v Medtel Pty Ltd [2001] FCA 1037 at [26] (order 5(a)); Vernon v Village Life Ltd [2009] FCA 516 at [69]. The costs of publication ultimately become costs in the cause of the matter to be determined at the conclusion of the matter.

Section 33Y(4) — Notice May be Given by Means of a Press Advertisement, Radio or Television Broadcast, or Any Other Means 25.19 This subsection relates to s 33Y(3)(b) and makes it clear that when the court orders the way in which the notice is to be given, it can require that the method used may be press advertisement, radio or television broadcast, or by any other means. This increases the likelihood of identifying group members who would otherwise be difficult to locate (for example, if there was not a list of all group members). 25.20 In more recent times, the courts have considered publication of notices on social media. However, the court has taken care to target the social media publication so the information is provided to those to whom it is relevant, and to limit the possibility that it will be sent to persons who have no interest in it. In Matthews v SPI Electricity Pty Ltd (2013) 39 VR 255, Forrest J ordered the publication of an opt-out notice on a new and standalone Facebook page established for the purposes of the representative proceeding. Similarly, in Wotton v Queensland [2017] FCA 406 (order 7), Mortimer J made orders for the placement on Facebook of an advertisement in relation to an opt-out notice. However, her Honour specifically directed that the advertisement was to be highly targeted according to identified

matters such as the location of the person receiving the advertisement (Palm Island or Townsville) and the interests of that person.

Section 33Y(5) — Personal Notice Only Allowed if Reasonably Practicable and not Unduly Expensive 25.21 As discussed earlier, the costs of personal notice will often be very high. Therefore, a court cannot order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable and not unduly expensive to do so. [page 390] 25.22 Where group members are identifiable (either because the class action was commenced as a closed class, or a shareholder class action where the share register can be interrogated), then it will often not be particularly onerous to provide individual notice. In Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296, Foster J ordered that personal service of the notice was warranted. The court ordered that by the fixed date, the defendant cause the notice to be sent to each person or entity listed in the defendant’s share register as having purchased shares in the defendant between 17 August 2012 and 15 July 2013 inclusive. Notices were to be sent by email where an email address was available, or failing that, by ordinary mail. In Femcare, Black CJ, Sackville and Emmett JJ noted that a ‘value judgment’ needed to be made, and that the circumstances dictated whether the costs of personal notice were appropriate. Their Honours made it clear that if an adverse determination would have significant consequences for a group member, then it would be reasonably practicable and not unduly expensive to ensure personal notice was provided. However, they also highlighted that when the claims were small individually, but large as an aggregate, personal notice was unlikely to be suitable (at 348–9): In determining what is ‘reasonably’ practicable and not ‘unduly’ expensive for the purposes of s 33Y(5), the Court is bound in our view, to take account of the possible adverse consequences to a group member of the representative proceeding as well as any possible

benefits. A value judgment is required. Plainly the Court would be more likely to be satisfied that personal notice is reasonably practicable and not unduly expensive if an adverse determination will have significant consequences for a group member. Moreover, s 33Y(5) must be understood in its statutory context. This includes s 33ZF, which empowers the Court to make any order it thinks appropriate to ensure that justice is done in the proceeding. In assessing the requirements of the judicial process it is also important to bear in mind the objects underlying s 33Y(5). As the extract from the LRC’s Grouped Proceedings report … shows, the objective is to find the most economical means of ensuring that the group members are informed of the proceeding and their rights. The LRC considered that ‘the more at stake for each person, the more effective the notice should be’. It also took the view that the procedures adopted should not shut out the very cases for which the representative procedure is most appropriate — claims involving small individual claims which are large in aggregate. It is hard to see why the requirements of the judicial process are to be interpreted so rigidly as to produce the consequence, as in Eisen v Carlisle, that the representative action is simply rendered impracticable in the very case in which it is needed. The rationale underlying the judicial process doctrine is the need to avoid bringing the administration of justice into disrepute or the infliction of injustice on individuals. Part IVA of the Federal Court Act aims to enhance access to justice by establishing procedures that enable legitimate common grievances to be remedied. These procedures provide advantages to

[page 391] group members whose claims would otherwise be without practical redress. The legislation in this respect seeks to strike a balance between the impracticality of requiring personal notice in every case and the need to give effective notice of the proceeding to group members. In doing so, it follows the pattern set over at least the last two centuries by courts of equity and the judges exercising rule-making powers. [Emphasis added]

25.23 In Courtney v Medtel [2001] FCA 1037, a case concerning implanted pacemakers, Sackville J ordered that notice be given personally by registered mail to each group member, holding that doing so was ‘reasonably practicable and not unduly expensive’ as patient registration lists were available. This allowed each person implanted with the pacemaker the subject of the proceedings to be identified. A consistent position was adopted as part of notification of the settlement of the proceedings. In Courtney v Medtel Pty Ltd (No 4) [2004] FCA 1233, the court was considering the manner of distribution of a settlement notice. Sackville J was dissuaded from ordering advertising of the notice, in light of

the high cost of advertising, the low chance that the advertisement would come to the attention of the remaining group members, the likelihood the notice would cause panic and confusion among the elderly who would likely be unaware what model pacemaker they had implanted, and the relatively modest sum at stake. His Honour ultimately approved prepaid ordinary mail as the method for providing notice. 25.24 Section 33Y(5) was also considered in Gararimabu v BHP & Ok Tedi [2001] VSC 304, a case which involved group members who did not speak English as a first language and resided in various villages as members of various tribes in Papua New Guinea. In that case, the court approved an arrangement where notice was given by holding explanatory meetings in a key 13 of the 115 villages. The respondents urged that the meetings should take place in every village. Hedigan J noted that, while the court should not be quick to endorse a procedure which is predicated on the assumption that the object might not be achieved, his Honour also emphasised that the language in s 33Y was ‘reasonably practicable’, and ‘not unduly expensive’. Hedigan J found that the use of this language ‘clearly empowers the Court to seek to balance the crucial objectives of the opt-out notice against undue expense and difficulties connected with conveying the relevant notice to the group members’. His Honour also found that it was highly unlikely if not practically impossible for a notice to be received and understood by all group members, ‘due to a whole range of matters … geographical isolation, illiteracy, lack of comprehension of the notice, intellectual disabilities, lack of attention or interest … [but] [t]his is, after all, an opt-out system and not an opt-in system’.

Section 33Y(6) and (7) — Prescription of Contents of Certain Notices 25.25 Subsection 33Y(6) states that a notice which concerns a matter for which the court’s leave or approval is required must specify the period within which a [page 392]

group member or other person may apply to the court, or take some other step, in relation to the matter. Subsection 33Y(7) prescribes that a notice which includes or concerns conditions must specify the conditions and the period, if any, for compliance. These subsections do not apply to all notices. Rather, they only apply when the court’s leave or approval is required, or when a notice prescribes certain conditions.

Section 33Y(8) — Failure of a Group Member to Receive or Respond to Notice does not Affect an Order or Judgment 25.26 Subsection 33Y(8) makes it clear that the failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding. The practical effect of s 33Y(8) is that certain group members may be bound by a judgment in a representative proceeding, despite never knowing that it had been commenced or conducted on their behalf. This was acknowledged in Femcare (at 348): It is undoubtedly true … that the combined effect of s 33Y(5) and (8) is that a group member may not be given or receive ‘notice … personally’ of the commencement of the representative proceeding yet will be bound by an adverse (or favourable) outcome. Of course, that group member may well learn of the representative proceeding nonetheless, either because he or she receives some other form of notice or the proceeding comes to his or her attention by other means. But there is at least a possibility that some group members will be bound by the outcome of a representative proceeding without ever knowing that it has been commenced or conducted on their behalf.

25.27 As a result, there is a risk that certain group members will experience injustice. However, the court has the power to remedy this. Section 33ZF empowers the court to make any order it thinks appropriate to ensure that justice is done in the proceeding. This balance between the continuance of proceedings, and the need to protect against personal injustice, was emphasised in the ALRC Report (at [196]): There will be instances where, although notice has been given in accordance with the Court’s directions, group members have failed to receive it or to understand its significance. There may also be cases where group members are unable to respond to the notice within the specified time or at all. The interests of group members should be protected as far as possible

but the absence of notice and the continuance of proceedings may not in fact be prejudicial to the interests of group members. Since a group member is not required to take any step in the proceedings, the absence of notice may not come to light until a much later date. Provided that the Court has power to ensure that a person has suffered no injustice by reason of not receiving notice the failure to give notice should not itself vitiate the proceedings. The Court should, however, have power to remedy any injustice which has occurred.

[page 393]

• CASE LAW • 25.28

Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296 (Foster J)

Mr Jones brought a class action against Treasury Wine Estates (TWE), alleging that from 17 August 2012 to 14 July 2013 (inclusive), TWE failed to advise the ASX of information which was likely to have a material impact on the value of TWE’s shares and made statements that misled or deceived the market about TWE’s expected earnings. Mr Jones claimed that he and the class members suffered loss as a result of these alleged breaches. The issue was whether personal service of a combined opt-out and group registration notice should be effected upon group members having regard to the requirements of s 33Y(5). Personal service of the unabridged group notice was warranted in the present case. The court ordered that by the fixed date, the defendant cause the notice to be sent to each person or entity listed in the defendant’s share register as having purchased shares in the defendant between 17 August 2012 and 15 July 2013 inclusive. Such notices were to be sent by email where an email address is available, or failing that, by ordinary mail. Foster J noted (at [21]–[26]): In determining those questions [it is reasonably practicable, and not unduly expensive, to do so] the Court must take account of the possible adverse consequences to a group member as well as any possible benefits (Femcare Ltd v Bright (2000) 100 FCR 331 at 348–349 [73] per Black CJ, Sackville and Emmett JJ).

… It was also submitted on behalf of Mr Jones that, whether or not TWE’s proposal to use the registration process currently in contemplation to close the class for all purposes is accepted, the consequences for group members of not having the substance of the group notice brought to their attention now (ie the loss of the benefit of any settlement and the loss of the opportunity to opt out) are sufficiently serious to warrant personal service, provided that personal service is reasonably practicable and not unduly onerous to carry out. There was evidence before me to the effect that the cost of a mail out was not likely to be prohibitive. It is difficult to be precise about this because the number of TWE shareholders in the group is not presently known. In addition, Maurice Blackburn is prepared to receive and address enquiries from group members in order to relieve TWE of the potential burden of having to deal with such enquiries.

[page 394]

25.29

McAlister v New South Wales (No 2) [2017] FCA 93 (Mortimer J)

This proceeding concerned the treatment of people living in what is called under the applicable New South Wales legislation a ‘licenced residential centre’ — Grand Western Lodge (GWL) in Millthorpe, regional New South Wales. The claim period for the proceeding extended from 1 January 2000 to 15 August 2011, the latter being the date on which the last residents were removed from GWL pursuant to orders made by the New South Wales Guardianship Tribunal. Mr McAlister was one of the residents of GWL. In broad terms, the claims made in the proceeding concerned how the applicant and other class members were treated while they were residents at GWL. The allegations covered a wide range of alleged conduct by the second and third respondents. There were allegations of physical mistreatment, psychological abuse, unjustified retention of the whole of the applicant’s pension payments, misappropriation of pension moneys, failures to maintain and secure the premises so as to prevent the residents injuring themselves, and failures to adequately supervise and look after residents, especially those who were older or high care residents and those at risk of self-harm. The applicants sought approval of settlement pursuant to Federal Court Act ss 33V and 33ZF. In considering whether the settlement was fair and

reasonable, Mortimer J considered whether group members had been appropriately notified and discussed how the attributes of the class members affected the form and content of notice to be given (at [16]–[17]): The class members, including the applicant, have a range of special needs and disabilities. Ms Tallis deposed in her affidavit sworn on 14 November 2016 that approximately 88% of the class members had been diagnosed with schizophrenia and 24% had been diagnosed with intellectual disabilities. It was apparent from much of the other material before the Court, including that adduced in support of various interlocutory applications about the trial process, that the residents of GWL (both male and female) had complex, and changing, medical and psychiatric conditions. The class members displayed a range of abilities in their capacity to understand and retain information provided to them, to make choices and decisions, to communicate, and to interact with those around them. The particular attributes of the class members affected not only arrangements for the trial itself, but also the form, content and communication of documents such as notices required under s 33X of the Federal Court Act, including, for present purposes, notices required by s 33X(4) of the Act. The settlement notices went through several iterations until the Court was satisfied they provided the information required, and did so in a way which ensured so far as possible that each class member would be given the information in a way she or he was likely to understand. For some class members, this meant the notices were sent to their guardians, financial managers or carers, with the applicant’s solicitors at Maurice Blackburn being required to ensure those individuals

[page 395] had subsequently explained the contents of the notices to the class member. The evidence demonstrated there were several class members who, because of particular health issues, were unlikely to have capacity to understand the notices, or for whom it was deemed by those treating the class member unwise for the class member to be confronted with this information at a given time. For each of those individuals, the applicant’s solicitors undertook to ensure the class member’s situation would be monitored so that she or he could be informed of the settlement and its effect on her or him at a time deemed suitable by those treating her or him. I am satisfied in the circumstances this was a fair and reasonable approach to take.

25.30

Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 (Black CJ, Emmett and Sackville JJ)

Femcare v Bright was a group proceeding brought by Ms Bright for injury, loss and damage on her own behalf and on behalf of other women who underwent a sterilisation procedure using ‘Filshie applicators’ or ‘Filshie clips’. Part of the proceedings related to a constitutional challenge to Pt IVA as being beyond the Commonwealth’s legislative competence. It was alleged that it was beyond power to remove a person’s rights without that person receiving personal notice. In determining the validity and application of Pt IVA, the Full Federal Court considered s 33Y. The court considered s 33Y(5), which prevents a court from ordering notice to be given personally, unless satisfied that it is ‘reasonably practical’ and not ‘unduly expensive’. Black CJ, Sackville and Emmett JJ stated (at [73]): … the Court is bound in our view, to take account of the possible adverse consequences to a group member of the representative proceeding as well as any possible benefits. A value judgment is required. Plainly the Court would be more likely to be satisfied that personal notice is reasonably practical and not unduly expensive if an adverse determination will have significant consequences for a group member.

25.31 The court further stated that in assessing the requirements of the judicial process it was necessary to consider the objects underlying s 33Y(5). The court stated ‘the objective is to find the most economical means of ensuring that group members are informed of the proceeding and their rights’: at [74]. They endorsed the ALRC Report’s statement that ‘the more at stake for each person, the more effective the notice should be’: at [74]. However, the court recognised that ‘the procedures adopted should not shut out the very cases for which the representative procedure is most appropriate — claims involving small individual claims which are large in the aggregate’: at [74]. [page 396]

25.32

King v GIO Australia Holdings Ltd [2000] FCA 1869 (Moore J)

The King v GIO Australia Holdings Ltd proceedings were class action proceedings which arose from the hostile takeover of GIO Australia Holdings Ltd (GIO) by AMP Insurance Investment Holdings Pty Ltd. The applicant alleged that during the takeover, the conduct of the respondents which led the applicant and group members to retain their shares in GIO and consequently suffer loss amounted to misleading and deceptive conduct. Moore J had previously found that notice was required under Federal Court Act s 33X. In this decision (forming part of the long-running representative proceeding), his Honour considered the form that the notice must take. Moore J acknowledged that the central purpose of the notice was to inform group members of the right to opt out conferred by s 33J, in addition to the time limits and consequences of exercising or not exercising that right: at [4]. He was ‘satisfied it was appropriate that there be some attempt to encapsulate in a few words the essence of the applicant’s case’: at [7]. He further noted ‘the notice should state as precisely as possible (but with the objective of doing so simply and in plain English) what are the characteristics that make a person a group member’: at [10]. Moore J decided that the notice should not attempt to explain the consequences of not opting out as the required section was either too complex or failed to deal with the various possible consequences: at [18].

25.33

King v GIO Australia Holdings Ltd [2001] FCA 270 (Sackville, Hely and Stone JJ)

This was an appeal of the above decision. The Full Federal Court agreed with Moore J that ‘an attempt to provide detailed information is likely to create more difficulties than it resolves’: at [16]. Nevertheless, they found that ‘group members should be informed that, unless the proceedings are settled, [the law firm] will not represent them to the point of judgment unless they assume a responsibility for their own legal fees’: at [16]. On this basis they required two additional paragraphs that explained this fact be added to the notice.

25.34

Courtney v Medtel

[2001] FCA 1037 (Sackville J) The class action in Courtney v Medtel was brought in relation to a pacemaker that was allegedly not fit for its purpose. These proceedings related to the notice to be given to all potential group members under s 33Y. The notice involved the concern that pacemakers implanted into persons for their health could potentially be defective. Sackville J acknowledged the prior decisions of King v GIO Australia Holdings Ltd [2001] FCA 270 and Femcare Ltd v Bright (2000) 100 FCR 331. He agreed that the [page 397] purpose of s 33Y was to allow potential group members to make informed decisions concerning their rights in the most economical manner: at [9]. He further quoted McMullin v ICI Australia Operations Pty Ltd (1998) 156 ALR 257, in requiring that the notice be written in plain English: at [10]. To these requirements he added his own observation that ‘[a]ny opt-out notice should be framed so as not to cause unnecessary alarm or distress to intended recipients’: at [11]. In this case, Sackville J was concerned with an announcement which could alert potential group members as to a future risk of harm. He acknowledged that this may include groups, such as the elderly, who might be ‘particularly susceptible to anxiety or distress’: at [11]. Therefore he stated that ‘[n]otices must be accurate but should be drafted with sensitivity to these considerations’: at [11]. 25.35 Sackville J further considered the required method of identifying group members to whom notice would be given. He accepted an ‘agreed protocol’ between the parties that (1) field staff of the first respondent would contact each institution or practitioner to whom the pacemakers were supplied and seek information relating to the current status of relevant patients; (2) the respondent’s solicitors would provide the applicant’s solicitors with the name, address, date of birth and potentially any date of death of each group member; (3) the applicant’s solicitors would search the

Probate Division of the relevant Supreme Court; (4) where the applicant’s solicitors could identify the executor or administrator of a deceased group member’s estate they would address the envelope to that executor or administrator; and (5) where they could not identify the executor or administrator, they would address an envelope to ‘The Estate of [name of deceased group member]’.

25.36

Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 4) [2010] FCA 749 (Flick J)

These proceedings involved a notice given to group members for a class action relating to the Therapeutic Goods Administration. The notice to potential group members proposed by the applicants was unopposed by the respondents. Nevertheless, Flick J considered the operation of s 33Y. He summarised the requirements of a notice under s 33Y (at [23]), stating that the court must ensure that the notice: contains such information as prescribed in the Federal Court Act; complies with Practice Note CM 17, which was issued by the Chief Justice of the Federal Court on 28 June 2010; provides the information in a manner which is as readily understandable to those to whom it is addressed as possible; is not misleading; and is appropriate to promote the object and purpose for which it is given.

[page 399]

CHAPTER 26 Judgment — Powers of the Court: s 33Z • OVERVIEW • Section 33Z provides the court with a wide and flexible armoury of powers to determine matters in the representative proceedings and grant appropriate remedies. It also ascribes particular requirements when awarding damages in representative proceedings.

• LEGISLATION • Section 33Z, Federal Court of Australia Act 1976 (Cth) Judgment—powers of the Court (1) The Court may, in determining a matter in a representative proceeding, do any one or more of the following: (a) determine an issue of law; (b) determine an issue of fact; (c) make a declaration of liability; (d) grant any equitable relief; (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; (f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members;

(g) make such other order as the Court thinks just. (2) In making an order for an award of damages, the Court must make provision for the payment or distribution of the money to the group members entitled. (3) Subject to section 33V, the Court is not to make an award of damages under paragraph (1)(f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. [page 400] (4) Where the Court has made an order for the award of damages, the Court may give such directions (if any) as it thinks just in relation to: (a) the manner in which a group member is to establish his or her entitlement to share in the damages; and (b) the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined.

Section 33Z, Supreme Court Act 1986 (Vic) Judgment of the Court (1) The Court may, in determining a matter in a group proceeding— (a) determine a question of law; (b) determine a question of fact; (c) make a declaration of liability; (d) grant any equitable relief; (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; (f) award damages in an aggregate amount without specifying

amounts awarded in respect of individual group members; (g) make such other order as is just, including, but not restricted to, an order for monetary relief other than for damages and an order for non-pecuniary damages. (2) In making an order for an award of damages, or monetary relief the Court must make provision for the payment or distribution of the money to the group members entitled. (3) Subject to section 33V, the Court must not make an award of damages under subsection (1)(f) or monetary relief under subsection (1)(g) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. (4) If the Court has made an award of damages, the Court may give directions in relation to— (a) the manner in which a group member or sub-group member is to establish the member’s entitlement to share in the damages; and (b) the manner in which any dispute regarding the entitlement of a group member or sub-group member to share in the damages is to be determined.

[page 401]

Section 177, Civil Procedure Act 2005 (NSW) Judgment—powers of the Court (1) The Court may, in determining a matter in representative proceedings, do any one or more of the following: (a) determine a question of law, (b) determine a question of fact, (c) make a declaration of liability, (d) grant any equitable relief,

(e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies, (f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members. (2) In making an order for an award of damages, the Court must make provision for the payment or distribution of the money to the group members entitled. (3) Subject to section 173, the Court is not to make an award of damages under subsection (1)(f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. (4) If the Court has made an award of damages, the Court may give such directions (if any) as it thinks just in relation to: (a) the manner in which a group member is to establish the member’s entitlement to share in the damages, and (b) the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined.

Section 103V, Civil Proceedings Act 2011 (Qld) Judgment of the Court (1) The court may do any 1 or more of the following in deciding a matter in a representative proceeding— (a) decide an issue of law; (b) decide an issue of fact; (c) make a declaration of liability; (d) grant equitable relief; [page 402]

(e) make an award of damages for group members, sub-group members or individual group members, consisting of stated amounts or amounts worked out in a stated way; (f) award damages in an aggregate amount without stating amounts awarded in respect of individual group members; (g) make any other order the court considers just. (2) In making an order for an award of damages, the court must provide for the payment or distribution of the money to the group members entitled. (3) Other than as provided under section 103R, the court must not make an award of damages as mentioned in subsection (1)(f) unless a reasonably accurate assessment can be made of the total amount to which group members are entitled under the judgment. (4) If the court makes an order for the award of damages, the court may give any directions it considers just in relation to the way in which— (a) a group member must establish the member’s entitlement to share in the damages; and (b) any dispute regarding the entitlement of a group member to share in the damages must be decided.

• COMMENTARY • 26.1 Section 33Z confers wide powers on the Federal Court. In Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, Gummow and Hayne JJ observed (at [267]): From these provisions, it is clear that the Parliament intended to arm the Federal Court with a wide and flexible armoury of powers, capable of being adapted to the particular needs and novel circumstances of representative proceedings and any matter in such proceedings. Representative proceedings are not traditional litigation; nor should they be subjected to all of the requirements of such litigation. To confine the grant of such a statutory power is incompatible with the oft-repeated statements in this Court concerning the construction of grants of such powers to superior courts. In particular, it is inappropriate to impose upon such grants of power strictures derived from earlier times and traditional powers in litigation between individual parties.

26.2 See Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 at [134], [152]–[156], where Murphy J rejects a contention that the power in s 33Z is constrained to ‘matters in issue’ between the parties. See also Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194 at [56] and Farey v National Australia Bank Ltd [2016] FCA 340, where Beach J confirms that s 33Z(1)(g) is sufficiently broad to empower the court to order releases by group members in [page 403] the context of a settlement of a representative proceeding that go beyond the pleaded claims. The scope of a release in a proceeding is discussed in Chapter 32. Section 33Z(1) empowers the court, in determining a matter in a representative proceeding, to: determine an issue of law: s 33Z(1)(a); determine an issue of fact: s 33Z(1)(b); make a declaration of liability: s 33Z(1)(c); grant equitable relief: s 33Z(1)(d); make an award of damages: s 33Z(1)(e) and (f); and make such other order as the court thinks just: s 33Z(1)(g). In light of subs (g), where the court is empowered to make such other order as the court thinks fit, the powers enumerated in s 33Z(1) are not intended to be exhaustive. 26.3

When making an award for damages, the court:

has power to award damages to the representative party only, after the initial trial: s 33Z(1)(e). The court may then take submissions as to the appropriate orders or directions to be made in respect of the damages claims or assessments to be made in respect of all other group members (s

33Z(1)(g)): Diab Pty Ltd v YUM! Restaurants Australia Pty Ltd [2016] FCA 43 at [14]. must make provision for payment or distribution of moneys to group members who are entitled to damages: s 33Z(2); has the power to make an award in a lump sum or aggregate amount without specifying amounts for individual group members: s 33Z(1)(f). However, this is subject to the court satisfying itself first that a reasonably accurate assessment can be made of the total amount to which group members will be entitled under judgment: s 33Z(3); and may give such directions it thinks just in relation to the manner in which group members establish an entitlement to a share in the damages and in relation to how disputes regarding the entitlement of group members to a share in the damages is to be determined: s 33Z(4). Equivalent provisions exist under the New South Wales, Victorian and Queensland regimes: see Civil Procedure Act 2005 (NSW) s 177; Supreme Court Act 1986 (Vic) s 33Z; Civil Proceedings Act 2011 (Qld) s 103V. While substantially similar, s 177 of the New South Wales Act does not contain an equivalent to s 33Z(1)(g).

Lump Sum or Aggregate Damages 26.4 Section 33Z sets out a regime for the award of damages for group members in representative proceedings. It prescribes the manner in which those damages may be awarded by the court. [page 404] Subsection (1)(e) empowers the court to award damages in the usual way. It allows the courts to award damages to group members, sub-group members or individual group members in specified amounts or in such manner as the court specifies. Sometimes it will not be appropriate or possible to specify damages awards to individual group members. This was recognised in Blairgowrie Trading Ltd v

Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539, where Wigney J observed (at [151]): If sub-groups or individual members are successful in establishing their claims, there may be an award of damages. It is possible, but perhaps unlikely, that an award of damages is made in an aggregate amount under s 33Z(1)(f) of the FCA Act. More likely, there would be an award of damages for group members, sub-group members or individual group members under s 33Z(1)(e) of the FCA Act. In that case, the court can work out the amounts payable in such manner as it specifies and must, by reason of s 33Z(2) of the FCA Act, make provision for the payment or distribution of the money to group members. In making provision for distribution, the court may establish a fund under s 33ZA of the FCA Act.

Subject to s 33V, s 33Z(1)(f) allows the court to approve a settlement of an aggregate amount of damages without the requirement to specify amounts in respect of individual group members. The court, however, must be satisfied that a ‘reasonably accurate assessment’ can be made of the total amount to which group members will be entitled: s 33Z(3). This allows the court to fix a lump sum of damages to be paid and for individual group member entitlements to be determined at a later stage. 26.5 An aggregate assessment can be made where ‘appropriate’. The Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) provided examples where aggregate assessment would be appropriate (at [224]): the number of group members and the extent of each of their claims can be obtained from the respondent’s records or otherwise, without the need for further assessment; the total liability of the respondent can be established without determining the share of each member of the group; the total liability of the respondent can be determined in some other way with reasonable accuracy.

The ALRC suggested (at [227]) that an aggregate assessment could reduce parties’ costs and the costs associated with the administration of justice compared with many separate assessments: After an aggregate assessment has been made and the amount paid, the respondent’s liability to that group will have been completely and

[page 405]

finally determined. It will have no further obligations in relation to the group members’ proceedings. But it will not always be possible to make an aggregate assessment. It may be difficult to estimate the number of group members or the extent of damage of each. This could result in a respondent paying more than the total loss that would have been capable of proof in individual claims. Alternatively, the number of group members or the amount of their loss may be underestimated. As a result, some may receive no relief, as the judgment will bring to an end the liability of the respondent. For these reasons, aggregate assessment will not always be the most appropriate answer and may not be in the interests of group members.

26.6 The phrase ‘reasonably accurate assessment’ was considered in Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc (1998) 83 FCR 424, and is the leading case on point. O’Loughlin J found that a ‘reasonably accurate assessment’ imports an element of judicial discretion and does not require a mathematical formula: at [448]. The legislature did not intend it to be read down due to an evidentiary inability to identify each group member entitled and the amount of damages each member has suffered. The phrase was also considered by the Victorian Court of Appeal in the context of a challenge to an equivalent provision of the Supreme Court (General Civil Procedure) Rules 1996 (Vic) in Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Ltd [2000] VSCA 103; (2000) 1 VR 545. Brooking JA found that it was clear that it was intended that a reasonably accurate assessment did not require a degree of accuracy as in an ordinary litigation and something less should suffice. It ‘was intended to authorise departure from the principles governing individual assessment’: at [27]–[28]. Phillips JA held (at [55]): A reasonably accurate assessment of damages is ordinarily no more and no less than can be made when unliquidated damages are sought, and it will be altogether different when liquidated damages are claimed.

26.7 According to Ormiston JA, the section did not alter the law of damages which are to be assessed otherwise than in accordance with recognised principles: at [35]. To the extent that plaintiffs might be entitled to less than their fair share of damages under an order for damages, this may indicate that an aggregate award would not be appropriate. In relation to O’Loughlin J’s interpretation of ‘reasonably accurate

assessment’ in Australian Competition and Consumer Commission v Golden Sphere International Inc, Ormiston JA made the following comments (at [36]): It is not necessary to express any final opinion about O’Loughlin J’s broad-brush approach to the federal equivalent of r 26(3) in Australian Competition and Consumer Commission v Golden Sphere International Inc, but, whatever was there in fact calculated, I would not read it as endorsement of the making of awards which are insufficient to enable group members to recover their full damages. If it were, I would respectfully disagree with it.

[page 406] In Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; 189 ALR 161; 76 ALJR 926; [2002] HCA 27 at [169], Gleeson CJ, referring to Ormiston JA’s comments in Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Ltd [2000] VSCA 103; (2000) 1 VR 545, observed: There is nothing in s 33Z that requires damages to be assessed otherwise than in accordance with recognised legal principles.

While group members are not technically parties to the proceeding, the award of damages to them as empowered by s 33Z makes it clear that the group members nevertheless institute or bring an action when a representative proceeding is commenced: see Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14 at [43], [65]: … ss 33Z and 33ZB, which permit the Court to decide common issues and make an award of damages in favour of group members, are not inconsistent with the notion of group members bringing an action. As the applicant pointed out, it would be remarkable if group members could have their claims determined in a Pt IVA proceeding, be bound by any subsequent judgment, and receive an award of damages without them being treated as having brought an action in respect of those claims …

Cy-près Rule 26.8 Cy-près is an abbreviation of the French cy près comme which means ‘as near as possible’. The term ‘cy-près’ has its origins in trusts law. In circumstances where the terms of a trust would result in impossibility or are impractical to be carried out, rather than allow the instrument to fail, the cy-

près doctrine empowers courts to give effect to a trust’s underlying intent by directing moneys to their ‘next best use’. In the representative proceeding context it refers to the situation where rather than distributing compensation to individual group members in accordance with the loss they have suffered, the aggregate fund is distributed in some other manner because the distribution of the compensation is impossible or impracticable. Distribution may be impossible or impracticable when group members are difficult to identify, group members change constantly or where the sums to be distributed are too small to be able to be distributed efficiently. See Rachel Mulheron, The Class Action in Common Law Legal Systems (Hart Publishing, 2004) p 426 and American Law Institute, Principles of the Law of Aggregate Litigation (2010) §3.07. 26.9 Cy-près relief is more commonly used in class actions in the United States and in Canada. For example, in Boyle v Giral 820 A 2d 561 (DC, 2003), there was an appeal from a class action brought against distributors and sellers of vitamin products by indirect purchasers. It was alleged that the defendants engaged [page 407] in a price-fixing and market allocation scheme in violation of the District of Columbia Antitrust Act, DC Code §§ 28–4501ff (1996), and the District of Columbia Consumer Protection Procedures Act, DC Code §§ 28–3901ff (1996). The court approved a settlement agreement. The court considered, however, that it would be impractical to provide individual compensation to the consumer class members. Very few consumers could be expected to have kept proof of purchase of goods containing vitamins, in some cases bought a number of years earlier. The court considered that the difficulty and cost of identifying and paying individual claimants would likely exhaust the settlement moneys allocated. Instead, the court ordered that the moneys should be distributed to eligible organisations for the express purpose of improving the health and nutrition of District of Columbia citizens, or the advancement of nutritional, dietary or agricultural science in the District of

Columbia. The court considered that this was fair, reasonable and adequate, and was in the best interests of the consumer class members. The decision was upheld on appeal. The appeal court agreed with the trial court that a cyprès distribution was appropriate in the circumstances. The court held that the proposed recipients under the cy-près plan would benefit District of Columbia residents by expanding paediatric services, operating a medical clinic, counselling pregnant adolescents, offering health-related education to schoolchildren, and enforcing the District’s consumer protection law. A cy-près remedy therefore provides the court with the power to order damages that cannot otherwise be distributed to individual group members, to be allocated to a charity or a public interest organisation or for other beneficial public use. Whether cy-près relief is permissible in Australia is unclear. 26.10 Despite legislative attempts at reform, Australian legislation remains without an explicit power to award cy-près remedies. One of the hurdles to introducing a cy-près remedy is s 33M, discussed in Chapter 14. However, the Federal Court is empowered to: establish a fund for the distribution of moneys: s 33ZA; award damages in an aggregate amount without specifying amounts awarded in respect of individual group members: s 33Z(1)(f); make such other order as the court thinks just: s 33Z(1)(g); and award damages subject to there being a reasonably accurate assessment made of the total amount group members are entitled to: s 33Z(3). 26.11 It should be observed that the Federal Court has handed down ‘cyprès’ type awards. In Guglielmin v Trescowthick (Federal Court of Australia, Proceeding No SAD 153 of 2002), the court made orders for any remaining settlement moneys to be paid to the applicants’ lawyers. In King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 980, Moore J approved a representative proceeding settlement containing a term that any remaining funds be paid to ‘the

[page 408] Australian Institute of Management for the purposes of training corporate officers and directors, or to the Australian Shareholders’ Association’. Further, in Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc at [449], the court accepted an estimate of damages based upon a two-thirds reduction for the possibility that group members may have recouped a part of their losses by on-selling the relevant certificates. The respondents did not counter this evidence. O’Loughlin J stated that to allow the respondents to succeed on the basis that the applicant could not prove damages ‘would be tantamount to allowing the respondents to profit from their wrongdoing’. As the respondents had possession of the information that would allegedly refute the applicant’s claims, it was appropriate to put the evidentiary onus on the respondents. As they did not refute the ACCC’s calculations, the court found the ACCC’s estimate to be reasonably accurate. 26.12 There have been various legislative attempts to reform the legislation to explicitly introduce the doctrine into law. See: Australian Law Reform Commission, ‘Access to the Courts — II: Class Actions’ (1979) at [48]–[51]; Victorian Attorney-General’s Law Reform Advisory Council Expert Report 2, ‘Class Actions in Victoria, Time For A New Approach’, Vince Morabito and Judd Epstein (1997) at 57; Victorian Law Reform Commission, ‘Civil Justice Review Report’ (2008) at [531]–[533], [559]–[560]; Commonwealth Attorney-General’s Department, ‘A Strategic Framework for Access to Justice in the Federal Civil Justice System’ (2009) at [137]– [138]; Consultation Draft Civil Procedure Amendment (Supreme Court Representative Proceedings) Bill Discussion Paper (2010); Draft Civil Procedure Amendment (Supreme Court Representative

Proceedings) Bill 2010 (NSW) Sch 1; Amendment of Civil Procedure Act ss 177–178; Courts and Crimes Legislation Further Amendment Bill 2010 (NSW) Sch 6; Amendment of Civil Procedure Act ss 177–178.

Availability of Exemplary Damages 26.13 The Federal Court Act Pt IVA does not expressly restrict the court’s power to award exemplary damages in an appropriate case. In Nixon v Philip Morris (Australia) Ltd (1999) 95 FCR 453; 165 ALR 515; [1999] FCA 1107, however, the respondents contended that Pt IVA evinces an intention to exclude such an award. They argued that s 33Z is exhaustive of the power of the Federal Court to grant final relief. Wilcox J rejected this argument: at [113]–[119]. Section 33Z(1)(e) empowers the court to ‘make an award of damages for group members’ in a representative proceeding. His Honour could not see any reason to read down that power, especially [page 409] in a way that would seriously limit the claimants’ substantive rights. He considered that if the parliament had such an intention it would be expressly stated in the legislation. 26.14 On appeal, in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229, Sackville J considered that it was inappropriate to deal with the question of exemplary damages in light of the orders proposed by Spender and Hill JJ that the proceedings were not to continue as representative proceedings. He noted, however, that this should not necessarily be taken as implying any disagreement with Wilcox J’s reasoning on the issue. Wilcox J’s decision was referred to in Schutt Flying Academy (Australia Pty Ltd) v Mobil Oil Australia Ltd [2000] VSCA 103; (2000) 1 VR 545. Ormiston JA noted that he would reach the same conclusion in relation to the almost

identical Victorian provision, finding no implied confinement of the scope of damages available.

Such Orders as the Court Thinks Just 26.15 In Earglow Pty Ltd v Newcrest Mining Ltd, the court was considering an application for approval of a settlement pursuant to s 33V. In considering the application, the court determined that it had power to reduce the funding commission paid to a litigation funder, but otherwise approve the settlement, relying on the broad power conferred by s 33Z(1)(g), in addition to s 33ZF. Murphy J rejected an argument that those powers were constrained to regulating ‘matters in issue between the parties’. His Honour observed (at [152]–[154]): First, the aim of the provisions is to empower the Court to deal with unforeseen difficulties arising from the introduction of the new Part IVA procedure (McMullin No 6 at 4; Courtney at [48]) which speaks against so confining the scope of the power. Second, in a settlement approval application the Court’s central task is to assess whether a settlement is fair and reasonable in the interests of group members to be bound to it and they are not parties to the proceeding. That assessment may relate to issues as between group members and have little to do with matters in issue between the applicant and respondent. I note that in Richards the Full Court set aside settlement approval for reasons that included the unfairness of the proposed funder’s premium as between group members and unrelated to matters in issue between the parties. Third, it is implicit in Earglow’s acceptance of the Court’s power to refuse settlement approval if the funding commission charged to group members is excessive, that the Court is empowered to make orders in respect of matters that are not in issue between the parties.

However, in Mitic v OZ Minerals Ltd (No 2) [2017] FCA 409 at [28], Middleton J stated that while s 33Z is expressed in broad terms it is not specifically directed to settlement approvals, but relates generally to the power of the court in representative [page 410] proceedings. Once the court is dealing with a settlement approval application, the focus is upon s 33V. As a result, Middleton J stated that he

would not readily adopt the view that the very general broad power found in s 33Z(1)(g) would provide the power to vary or effectively vary the funding agreement, or otherwise interfere with the contractual rights and obligations of a litigation funder and class members. Nonetheless, s 33Z(1)(g) may be broad enough for the court to fashion a ‘common fund’ if a matter does not settle and a judgment is delivered: see Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) at [226].

Closing the Class 26.16 Section 33Z(1)(g) does not empower the court to ‘close a class’. That power is derived from s 33ZF: see Chapter 32. In McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1, the respondents sought an order that would have the effect of closing the class of group members. They were concerned that it would be open to people falling within the described groups to make a claim years later. Wilcox J considered whether the court had the power to close the class. The respondents argued that this power was conferred by s 33Z(1)(g), which provides that the court, in determining a matter in a representative proceeding, may ‘make such other order as the Court thinks just’. Wilcox J rejected the respondents’ argument that s 33Z(1)(g) would allow the court to make orders closing the class. His Honour held that s 33Z, when read as a whole, only confers upon the court powers relating to the resolution of the controversy between the parties (at [3]–[4]): I do not think such an order is sanctioned by s 33Z(1)(g). Section 33Z is included in Div 4 of Pt IVA of the Act, which is headed ‘Judgment Etc’. It is concerned with the Court’s powers ‘in determining a matter’; that is, resolving the controversy between the parties. Paragraphs (a) to (f) each relate to the substance of the Court’s decision or the available form of relief. I think par (g) is also concerned with those matters; it is included to empower the Court to make any other order, in relation to relief, that seems just. I do not think s 33Z(1)(g) empowers the Court to make a procedural order limiting future claims.

Wilcox J held that, instead, an order to close the class falls within the wide and general power conferred by s 33ZF(1).

Separate Questions

26.17 Section 33Z(1) grants the court broad powers to determine issues of law or fact, make a declaration of liability, and grant equitable relief or damages: see Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515 at [76]. This enables the court to make findings or declarations that will not conclusively determine the issues between the parties. It is one source of the court’s power to determine separate questions: see Andrews v Australia and New Zealand Banking Group Ltd (2011) 281 [page 411] ALR 113 at [69]–[71] (referring to Federal Court Act ss 33Z(1), 33ZF(1), 37P(2) and Federal Court Rules 1979 (Cth) O 29 r 2 (now Federal Court Rules 2011 (Cth) r 30.01)). Equally, the courts have been prepared to rely solely on the court rules for the power to utilise the separate question procedure: see Konneh v NSW (No 3) (2013) 235 A Crim R 191; [2013] NSWSC 1424 at [1] (relying on Uniform Civil Procedure Rules 2005 (NSW) r 28.2).

• CASE LAW • 26.18

Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 (Murphy J)

The court was considering an application for approval of a settlement pursuant to s 33V. In considering the application, the court determined that it had power to reduce the funding commission paid to a litigation funder, but otherwise approve the settlement, relying on the broad power conferred by s 33Z(1)(g), in addition to s 33ZF. Murphy J outlined his interpretation of the relevant powers (at [134]): In my view the Court’s power to make orders approving a proposed settlement but disallowing or varying the funding commission to be deducted from class members’ settlement amounts under the settlement inheres in its powers:

to determine whether a proposed settlement is fair and reasonable (s (a) 33V(1)) and upon settlement approval to ‘make such orders as are just with respect to the distribution of any money paid under a settlement’ (33V(2)) (emphasis added); (b) to ‘make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding’ including on its own motion (s 33ZF(1); (c) to ‘make such other order as the Court thinks just’ (s 33Z); and/or (d) ‘to make orders of such kinds… as the Court thinks appropriate’ (s 23).

Murphy J rejected an argument that those powers were constrained to regulating ‘matters in issue between the parties’. His Honour observed (at [152]–[154]): First, the aim of the provisions is to empower the Court to deal with unforeseen difficulties arising from the introduction of the new Part IVA procedure (McMullin No 6 at 4; Courtney at [48]) which speaks against so confining the scope of the power. Second, in a settlement approval application the Court’s central task is to assess whether a settlement is fair and reasonable in the interests of group members to be bound to it and they are not parties to the proceeding. That assessment may relate to issues as between group members and have little to

[page 412] do with matters in issue between the applicant and respondent. I note that in Richards the Full Court set aside settlement approval for reasons that included the unfairness of the proposed funder’s premium as between group members and unrelated to matters in issue between the parties. Third, it is implicit in Earglow’s acceptance of the Court’s power to refuse settlement approval if the funding commission charged to group members is excessive, that the Court is empowered to make orders in respect of matters that are not in issue between the parties.

Murphy J concluded (at [157]) that if a proposed settlement is otherwise fair and reasonable, yet the funding commission is excessive, then the court does indeed have the power to reduce the amount of the funding commission. His Honour rejected the notion of a ‘binary choice’ between accepting and rejecting the settlement, and considered that where it is just, the court may approve the settlement and reduce the funding commission.

26.19

Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc (1998) 83 FCR 424 (O’Loughlin J)

The Australian Competition and Consumer Commission (ACCC) commenced proceedings on its own behalf against the respondents, Golden Sphere International Inc (Golden Sphere), Pamela Reynolds and Victor Cottrill, who were the alleged perpetrators of an illegal pyramid selling scheme (scheme) contrary to Trade Practices Act 1974 (Cth) (TPA) s 61(2A). After commencing proceedings, the ACCC amended its original application to seek relief in a representative capacity on behalf of consumers who had participated in, and lost money as a result of, the pyramid selling scheme. The ACCC claimed to be a representative party pursuant to Federal Court Act Pt IVA. 26.20 In considering the respondents’ submissions that the proceeding should be dismissed pursuant to Federal Court Act ss 33M and 33N, his Honour considered the power of the court in representative proceedings to award damages in an aggregate amount pursuant to Federal Court Act s 33Z. O’Loughlin J observed (at 448): The respondents submitted that any award of damages in this case should be limited to an amount of $1,000 or thereabouts. The significance of this sum is that the ACCC called, as witnesses in the trial, a selected few persons who gave evidence about the circumstances in which they became participants in the Golden Sphere scheme. Their evidence was that their losses totalled about $1,000. If the Court were to accept this submission it would, in my opinion, destroy the efficacy of representative proceedings. The purpose of such proceedings is to avoid the very exercise that the respondents now described as a deficiency or a hiatus; as I understand their submission they would expect the ACCC to call every person who participated in the

[page 413] Golden Sphere scheme (other than those who have opted out) to prove the individual loss

or damage of each such person. If that exercise had to be carried out, the whole purpose of representative proceedings would be emasculated. The legislation supports the contrary views; it gives to the Court wide discretionary powers to fix awards of damages consistent with the circumstances of a particular action. This is made clear by the following provisions of subs 33Z(1) of the FCA: The Court may, in determining a matter in a representative proceeding, do any one or more of the following: … (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; (f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members; (g) make such other order as the Court thinks just. These provisions, and the contents of s 33ZB make it clear that the identity of the group who may ultimately enjoy the benefit of a judgment and an award of damages will, most likely be indeterminate at the time of the judgment. The latter section requires a judgment only to ‘describe or otherwise identify the group members who will be affected by it’. Finally, the respondents claimed that the evidence before the Court was insufficient to allow the Court to fix an appropriate award for damages. Subs 33Z(3) of the FCA provides as follows: Subject to s 33V, the Court is not to make an award of damages under para (1) (f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. S 33V deals with the need to obtain the Court’s approval to a settlement or a discontinuance and need not be considered further. As will become apparent, the amount of damages that I propose to award will be ‘an aggregate amount without specifying amounts awarded in respect of individual group members’ but I remain satisfied that the calculations that have been made by the ACCC (as amended by me for the reasons hereinafter set out) constitute a ‘reasonably accurate assessment’ of the ‘total amount to which group members will be entitled under the judgment’. The word ‘assessment’ used in the phrase ‘assessment of damages’ imports an element of judicial discretion: assessing damages is not the application of mathematical formulae. When it is qualified by the words ‘reasonably accurate’ it can be said, with confidence, that the judicial discretion has been widely extended. I am satisfied that the legislature has intended that the practical application of the provisions of Pt IVA of the FCA is not to be read down through any evidentiary inability to identify every member of the group and the relevant amount of damage that each member has or may have suffered.

[page 414]

26.21

Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Ltd (2000) 1 VR 545; [2000] VSCA 103 (Winnecke P, Brooking, Ormiston, Phillips and Charles JJA)

Five justices of the Supreme Court of Victoria were asked to consider a challenge to the validity of the then Supreme Court (General Civil Procedure) Rules 1996 (Vic) O 18A r 25(1)(f). The provision is equivalent to Federal Court Act s 33Z(1)(f). The substance of the challenge was that permitting the Supreme Court to make a ‘reasonably accurate assessment’ of damages contravened established legal principle with respect to determining damages in that it authorised the court to order damages that could not satisfy the claims of individual members. It was submitted that this was not a valid exercise of the court’s power and infringed on the rights of group members. 26.22 In considering the validity of the rule, the court considered the nature of the legislation before it and the meaning of the phrase ‘reasonably accurate assessment’. Ormiston JA, with Charles JA agreeing, upheld the provision’s validity. His Honour reasoned (at [34]): Additionally and arguably more importantly these damages rules are properly characterised as rules of practice and procedure. They do not, and do not purport to, change any principle as to the assessment of damages. The most they do is provide for what is hoped to be a simpler and less expensive way of paying properly calculated damages to each member of the class who chooses to claim. They are rules of practice and procedure because they prescribe ‘the mode of proceeding by which a legal right is enforced, as distinguished from the law which gives or defines the right’: per Lush LJ in Poyser v Minors, cited in, eg, Minister for Army v Parbury Henty & Co Pty Ltd. No provision in the new rules prescribes or even suggests that damages should be assessed other than according to recognised existing legal principles. Inasmuch as para (1)(f) permits an award of damages ‘in an aggregate amount’, that refers only to the manner in which the defendant may be required to satisfy its obligations, not to the amount to which ‘individual group members will be entitled under the judgment’, as referred to in para (4). Where the subsequent provisions refer to group members establishing their entitlements ‘to share in the damages’, the assumption is that those entitlements will be calculated in accordance with the general law. Similar views have been taken as to the meaning of s 33Z of the Federal

Court Act 1976 (Cth), albeit that that legislation is not delegated legislation but must be construed having regard to constitutional limitations. The Law Reform Commission discussion paper on ‘Grouped Proceedings in the Federal Court’ (which recommended a slightly different regime) made clear that the ‘primary goal’ of its proposals was to enable ‘identified persons who establish their loss to secure the legal remedy the law provides’. The broad thrust of these recommendations was accepted in the second reading speech of

[page 415] the Attorney-General. From these materials Wilcox J recently concluded that the federal section (in almost identical terms) contained no ‘implied confinement of the scope of the damages available’, for it would be a serious step for Parliament ‘in the guise of providing an additional procedure for the litigation of claims, actually to limit claimants’ substantive rights’: Nixon v Philip Morris.

26.23

Phillips JA held (at [54]):

It was contended for the defendant that O 18A went beyond the legitimate determination at law of claims for damages in that it authorised a global assessment of damages, departing from the principle that a plaintiff could recover — and recover only — damages for actual loss and damage suffered and that the defendant should pay neither more nor less than that. If global assessment resulted in a sum which was less than the amount due to the individuals for whom the amount was sought, then the individual claimants must have their legitimate claims diminished (the argument ran); and if more, the defendant necessarily suffered an increased — and thus far unjustified — burden. And the likelihood of its not being too little or too much was remote, given that under O 18A a vast number of claimants might be brought together in the one proceeding. In my opinion this argument goes not to the validity of O 18A but to what might be attempted under it (whether correctly or not). In terms r 18A.25(3) requires the court not to make an award of damages under para (1)(f) ‘unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment’, and thus far it is unexceptionable. A reasonably accurate assessment of damages is ordinarily no more and no less than can be made when unliquidated damages are sought, and it will be altogether different when liquidated damages are claimed. Uncertainty might arise in respect of the number of claimants, but the court has the power to cope with that; for having adjudicated on the liability of the defendant in a general way, the court has ample power under O 18A to fix the number and identity of those who are claiming compensation and to make orders accordingly, calling if it wishes for more precise evidence of particular losses if such is considered necessary or desirable. There is even an express provision for refund to the defendant, should any fund established to answer the group’s claims prove excessive: see r 18A.26(5).

26.24

Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572; (1994) 124 ALR 605; ATPR 41-349 (Beaumont, Gummow and Carr JJ)

The applicant represented a group which comprised Ripoll Holdings Pty Ltd (Ripoll) (a former trustee of the Unit Trust), Rosewick Pty Ltd (the present trustee of the Unit Trust), unit holders in the Unit Trust, and guarantors of the liabilities of Ripoll to NZI Securities Australia Ltd (NZI Securities) and NZI Capital Corporation Ltd (NZI Cap Corp). [page 416] There was a trial of allegations that NZI Securities and NZI Cap Corp had contravened Trade Practices Act 1974 (Cth) s 52, in connection with the entry, or possible entry, by Ripoll, into loan facility arrangements. The trial judge held, against the applicant, that there had been no contravention of s 52 and made the following negative declaration, inter alia (at [572 E]): Neither NZI Securities Australia Limited nor NZI Capital Corporation Limited contravened s 52 of the Trade Practices Act 1974 in connection with the entry, or proposed entry, by Ripoll Holdings Pty Limited into an arrangement for a finance facility on behalf of the DYV Unit Trust.

26.25 One of the group members appealed against the making of the negative declaratory order. It was held that the declaratory order did not comply with s 33ZB(a), and the discretion to make the order miscarried in any event because of the failure to consider its impact upon group members. There was a discussion by the court of the practice of making negative declaratory orders (at [575F], [575G], [576E], [577B]): Paragraph 33Z(1)(c) of the Federal Court Act empowers the Court, in determining a matter in a representative proceeding to ‘make a declaration of liability’. We shall assume, without deciding, that this includes what has been called a ‘negative’ declaration.

The application of what Lord Wilberforce described as ‘some careful scrutiny’ always is appropriate before the making of a negative declaration … That is not to deny the utility of the remedy in some disputes, but it is hard to see how such relief could ever be given when it is adverse to one side and not sought, in appropriately framed process, by the other. … Part of the difficulty to which the appellant points, as representative party, is that, being necessarily final, the declaration encroaches upon what appear still to be live issues as regards the guarantors who are group members. … In the form in which it stands, the declaration is, at best, calculated to impede the trial of the remaining issues concerning the guarantors. The declaration should be set aside. No alternative in acceptable form was propounded before us.

[page 417]

CHAPTER 27 Constitution of Fund: s 33ZA • OVERVIEW • Section 33ZA provides a mechanism by which damages can be distributed to group members (as required by s 33Z(2)) by giving the court the power to create and administer a fund for distribution of damages. While the provision provides a formal mechanism to distribute damages awarded by the court, most of the consideration of how to effectively distribute compensation arises in the context of representative proceeding settlements, which will typically include a distribution scheme mechanism which the court needs to approve pursuant to s 33V.

• LEGISLATION • Section 33ZA, Federal Court of Australia Act 1976 (Cth) Constitution etc. of fund (1) Without limiting the operation of subsection 33Z(2), in making provision for the distribution of money to group members, the Court may provide for: (a) the constitution and administration of a fund consisting of the money to be distributed; and (b) either: (i) the payment by the respondent of a fixed sum of money into the fund; or (ii) the payment by the respondent into the fund of such

instalments, on such terms, as the Court directs to meet the claims of group members; and (c) entitlements to interest earned on the money in the fund. (2) The costs of administering a fund are to be borne by the fund, or by the respondent in the representative proceeding, as the Court directs. (3) Where the Court orders the constitution of a fund mentioned in subsection (1), the order must: (a) require notice to be given to group members in such manner as is specified in the order; and [page 418] (b) specify the manner in which a group member is to make a claim for payment out of the fund and establish his or her entitlement to the payment; and (c) specify a day (which is 6 months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund; and (d) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund. (4) The Court may allow a group member to make a claim after the day fixed under paragraph (3)(c) if: (a) the fund has not already been fully distributed; and (b) it is just to do so. (5) On application by the respondent in the representative proceeding after the day fixed under paragraph (3)(d), the Court may make such orders as are just for the payment from the fund to the respondent of the money remaining in the fund.

Section 33ZA, Supreme Court Act 1986 (Vic)

Constitution etc. of Fund (1) Without limiting the operation of section 33Z(2), in making provision for the distribution of money to group members, the Court may provide for— (a) the constitution and administration of a fund consisting of the money to be distributed; and (b) either— (i) the payment by the defendant of a fixed sum of money into the fund; or (ii) the payment by the defendant into the fund of such instalments, on such terms, as the Court directs to meet the claims of group members; and (c) entitlements to interest earned on the money in the fund. (2) The costs of administering a fund are to be borne by the fund or the defendant, or by both, as the Court directs. (3) If the Court orders the constitution of a fund mentioned in subsection (1), the order must— (a) require notice to be given to group members in such manner as is specified in the order; and [page 419] (b) specify the manner in which a group member is to make a claim for payment out of the fund and establish the group member’s entitlement to the payment; and (c) specify a day (which is 6 months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund; and (d) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund. (4) The Court may, if it is just, allow a group member to make a claim

after the day fixed under subsection (3)(c) if the fund has not already been fully distributed. (5) On application by the defendant after the day fixed under subsection (3)(d), the Court may make such orders as it thinks fit for the payment from the fund to the defendant of the money remaining in the fund.

Section 178, Civil Procedure Act 2005 (NSW) Constitution etc. of Fund (1) Without limiting the operation of section 177(2), in making provision for the distribution of money to group members, the Court may provide for: (a) the constitution and administration of a fund consisting of the money to be distributed, and (b) either: (i) the payment by the defendant of a fixed sum of money into the fund, or (ii) the payment by the defendant into the fund of such instalments, on such terms, as the Court directs to meet the claims of group members, and (c) entitlements to interest earned on the money in the fund. (2) The costs of administering a fund are to be borne by the fund, or by the defendant in the representative proceedings, or by both, as the Court directs. (3) If the Court orders the constitution of a fund under subsection (1), the order must: (a) require notice to be given to group members in such manner as is specified in the order, and (b) specify the manner in which a group member is to make a claim for payment out of the fund and establish the group member’s entitlement to payment, and

[page 420] (c) specify a day (which is 6 months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund, and (d) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund. (4) The Court may allow a group member to make a claim after the day fixed under subsection (3)(c) if: (a) the fund has not already been fully distributed or applied in accordance with an order under subsection (5), and (b) it is just to do so. (5) On application by the defendant after the day fixed under subsection (3)(d), the Court may make such orders as it thinks fit for the payment from the fund to the defendant of the money remaining in the fund.

Section 103W, Civil Proceedings Act 2011 (Qld) Constitution etc. of Fund (1) Without limiting section 103V(2), in providing for the distribution of money to group members, the court may provide for— (a) the constitution and administration of a fund consisting of the money to be distributed; and (b) either— (i) the payment by the defendant of a fixed sum of money into the fund; or (ii) the payment by the defendant into the fund of instalments, on the conditions the court considers appropriate, to meet the claims of group members; and (c) entitlements to interest earned on the money in the fund.

(2) The costs of administering the fund are to be borne by the fund or the defendant, as the court directs. (3) If the court orders the constitution of a fund under subsection (1), the order must— (a) require notice to be given to group members in the way stated in the order; and (b) state the way in which a group member must make a claim for payment from the fund and establish the member’s entitlement to the payment; and [page 421] (c) state a date, at least 6 months after the date on which the order is made, before which the group members must make a claim for payment from the fund; and (d) provide for the date before which the fund must be distributed to group members who have established an entitlement to be paid from the fund. (4) The court may, if it considers it just, allow a group member to make a claim after the date stated under subsection (3)(c) if the fund has not been fully distributed. (5) On application by the defendant after the date provided for under subsection (3)(d), the court may make the orders it considers just for the payment from the fund to the defendant of the money remaining in the fund.

• COMMENTARY • 27.1 Section 33ZA empowers the court to create and administer a fund for the distribution of damages to group members. The provision only deals with an award of damages. Where a class action settles and money is to be distributed to group members, the terms of settlement which require court

approval pursuant to s 33V will include details of the settlement distribution scheme. Administration of the fund includes issues such as how money is to be paid into the fund by the respondent and how any administration fees associated with the fund are to be paid: s 33ZA(1) and (2). 27.2 In circumstances where the court invokes its power under s 33ZA to create a fund, s 33ZA(3) sets out a number of orders that the court must make in relation to the operation of the fund. The orders must: (a) require notice be given to group members; (b) specify the manner in which a group member is to make a claim for payment out of the fund; (c) specify the manner in which a group member can establish an entitlement to payment; (d) specify a day (which is six months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund; and (e) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund. 27.3 One requirement is that the court must specify a date by which group members must make their claim, which must be at least six months after the court orders that the fund be created: s 33ZA(3)(c). The court may allow a group [page 422] member to make a claim after this date if the fund has not already been fully distributed and it is just to do so: s 33ZA(4). The court is also required to provide a date before which the fund must be distributed to any group member who has established a claim: s 33ZA(3)(d). After this date has passed, the court may, on application by the respondent,

make any orders it considers just for the payment of any remaining funds to the respondent: s 33ZA(5). 27.4 Section 33ZA has not been the subject of any substantive consideration by the courts, and therefore there is little guidance as to when the court will feel that it is appropriate to use its power under 33ZA to establish a fund. However, the Australian Law Reform Commission (ALRC), ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [231] states that such a fund will be appropriate where: the money can be distributed directly to identified group members immediately (for example, where the respondent does not have sufficient information or the resources to distribute the money); and where proof of each group member’s entitlement to compensation must be established before distribution. 27.5 In Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539, the court recognised the breadth of discretion conferred by s 33ZA and that it provided the court with the ability to make ‘common fund’ type arrangements in a case where the provision is enlivened (that is, damages are awarded). The court observed that ‘it appears as though the court’s powers in ss 33Z and 33ZA of the FCA Act are sufficiently broad to enable this to occur, though the circumstances may be more complicated than the circumstances that are likely to exist when a matter settles’: at [226]. 27.6 In Stanford v DePuy International Ltd (No 7) [2017] FCA 748, Wigney J made orders pursuant to s 33ZA and/or the settlement distribution scheme that had previously been approved authorising the administrators of the settlement distribution scheme to pay costs and disbursements out of the settlement sum, to the applicant law firms who were administering the settlement fund. The reliance on s 33ZA is problematic as the fund was created as a result of a settlement agreement approved by the court, not a judgment. As explained above, s 33ZA elaborates on s 33Z, which deals with an award of damages by the court.

[page 423]

CHAPTER 28 Effect of Judgment: s 33ZB • OVERVIEW • Section 33ZB has been described as ‘the pivotal provision’ of Pt IVA: Femcare v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [25]. It is s 33ZB which ensures that group members (even though they are not ‘parties’ to the proceedings) are bound by judgments of the court. It also ensures that the court takes account of the impact of a judgment on the group members as part of its decision-making process: see Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572 at 576–7; 124 ALR 605 per Beaumont, Gummow and Carr JJ (discretion to make declaratory order miscarried where there was a failure to consider its impact upon the group members whose substantive rights would be determined by it).

• LEGISLATION • Section 33ZB, Federal Court of Australia Act 1976 (Cth) Effect of judgment A judgment given in a representative proceeding: (a) must describe or otherwise identify the group members who will be affected by it; and (b) binds all such persons other than any person who has opted out of the proceeding under section 33J.

Section 33ZB, Supreme Court Act 1986 (Vic) Effect of Judgment A judgment given in a group proceeding— (a) must describe or otherwise identify the group members who will be affected by it; and (b) subject to section 33KA, binds all persons who are such group members at the time the judgment is given.

[page 424]

Section 179, Civil Procedure Act 2005 (NSW) Effect of Judgment A judgment given in a representative proceeding: (a) must describe or otherwise identify the group members who will be affected by it; and (b) binds all such persons other than any person who has opted out of the proceeding under section 162.

Section 103X, Civil Proceedings Act Effect of Judgment A judgment given in a representative proceeding—

must describe or otherwise identify the group members affected by it; (a) and (b) binds the group members described, other than a person who has opted out of the proceeding under section 103G.

• COMMENTARY • 28.1 Typically, an individual would need to be a party to proceedings for their rights to be affected by a judgment. 28.2 In a representative proceeding, group members are not ‘parties’: see Mobil Oil Australia v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 at [50]; Courtney v Medtel (2002) 122 FCR 168; [2002] FCA 957 at [36]; and the discussion of the status of group members in Chapter 2 (s 33A). While they are not parties to the proceedings, they are nevertheless persons who institute or bring an action: see Sanda v PTTEP Australiasia (Ashmore Cartier) Pty Ltd [2017] FCA 14. 28.3 Consistent with this, s 33ZB makes it clear that all group members who have not opted out of a representative proceeding will be bound by the court’s judgment.

Judgment 28.4 ‘Judgment’, as that term is used in s 33ZB, is defined in Federal Court of Australia Act (Federal Court Act) s 4 to mean ‘a judgment, decree or order, whether final or interlocutory, or a sentence’: see Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572 at 575; 124 ALR 605 per Beaumont, Gummow and Carr JJ. [page 425] In the context of a representative proceeding, where group members are

bound by the outcome, it is important to clarify what is meant by a ‘judgment’ and therefore what will bind group members. 28.5 Ah Toy v Registrar of Companies (1985) 10 FCR 280; 61 ALR 583 sets out the principles relating to what amounts to a ‘judgment’ as follows (10 FCR 280 at 285; 61 ALR 583 at 588–9): ‘judgment, decree or order’ bears the meaning which the words ‘all judgments, decrees, orders …’ have in Constitution s 73: Moller v Roy (1975) 132 CLR 622 at 625 per Barwick CJ; the accepted legal meaning of ‘judgment’ refers to the formal order made by a court which disposes of, or deals with, the proceeding then before it per Mason J in Moller v Roy at 639, citing R v Ireland (1970) 126 CLR 321 at 330; Lake v Lake [1955] P 366 at 343–4; ‘reasons for judgment’ are not themselves judgments, but they may constitute a case law precedent: see R v Ireland at 330 per Barwick CJ; see also McIlwain v Ramsey Food Packaging Pty Ltd (No 3) [2006] FCA 994 at [4]; ‘judgment’ refers only to operative judicial acts, not ‘reasons for judgment’: Driclad Pty Ltd v Commissioner of Taxation (1968) 121 CLR 45 at 64 per Barwick CJ and Kitto J; see also McIlwain v Ramsey Food Packaging Pty Ltd (No 3) at [4]; Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569 at [122] per Sundberg and Emmett JJ, with whom Finn J agreed, at [1]; and it is ‘of the essence’ of a judgment that it is binding on parties and definitive of legal rights: see Minister for Works (WA) v Civil and Civic Pty Ltd (1967) 116 CLR 273 at 277 per Barwick CJ. 28.6 Findings of fact, outlined in the court’s reasons for judgment, are not the ‘judgment’ and therefore will not bind group members. It is therefore important for the court to formalise answers to common questions by way of order. This is important for two reasons: (a) formalising answers to common questions as an order of the court ensures that those answers will meet the definition of a judgment and bind group members pursuant to s 33ZB; and

(b) the orders will enliven appeal grounds in group member cases. Although there is no appeal from reasons for judgment, an appeal will be competent if it challenges an adverse finding implicit in the judgment: Australian Telecommunications Commission v Colpitts (1986) 12 FCR 395. 28.7 The need to formalise answers to common questions in an order makes articulation of the common questions to be determined a critical feature of representative proceedings: see Merck Sharp & Dohme (Aust) v Peterson [2009] FCAFC 26. In Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (2010) 184 FCR 1; 266 ALR 1; [2010] FCA 180, Jessup J delivered his reasons on 5 March 2010. The [page 426] parties were then directed to make submissions about what the answers to the schedule questions should be in light of those reasons. The schedule questions were then answered in the subsequent decision of Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (No 5) [2010] FCA 605.

Must Describe or Otherwise Identify the Group Members 28.8 That group members must be described or otherwise be identified is a clear requirement of Federal Court Act s 33ZB(a): see Jenkins v NZI Securities Australia Ltd at 575 per Beaumont, Gummow and Carr JJ. However, the particularity with which group members must be identified is unclear. The provision does not require each group member to be individually identified at the time of judgment as often the identity of group members will not be known. (Section 33H(2) does not require that group members be individually named in the application commencing the representative proceedings: see Chapter 9.) Often, the closing of a class will occur after judgment is delivered or a settlement has been agreed: see discussion in Chapter 32.

In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212, Gillard J had previously delivered judgment in relation to common questions and was then faced with the need to determine orders giving effect to that judgment under s 33ZB. His Honour said (at [44], [49]): Orders should be made giving effect to the findings made by the court as a matter of law and in compliance with s 33ZB(a). In my view the defendants, being successful against some parties, are entitled to a judgment against those parties … in my view, the orders must relate to the present parties to the proceeding. No orders are to be made against specific claimants. The answers to the questions which form part of the judgment and the order pursuant to s 33ZB(a) of the Act will bind the members of the groups who gave evidence and whose claims failed. As the defendants have had success against both plaintiffs it is appropriate that the orders should reflect that success and judgment entered in their favour against those plaintiffs in respect of their personal claims. It will be necessary to make an order pursuant to s 33ZB describing the group members who will be affected by the orders made …

Judgment in a Representative Proceeding 28.9 The term ‘representative proceeding’ is defined in Federal Court Act s 33A (Chapter 2) as a proceeding commenced under s 33C. A ‘proceeding’ is defined in s 4 as including ‘an incidental proceeding in the course of, or in connexion with, a proceeding’. As such, interlocutory disputes meet the definition of ‘proceeding’ for the purposes of s 33ZB. This issue was considered in Fernando v Ruddock (as Minister for Immigration & Multicultural Affairs) [2000] FCA 1151, in which the Full Court of the Federal Court determined that an application for an extension to appeal [page 427] against the dismissal of a representative proceeding could be, in and of itself, a ‘representative proceeding’. In reaching that conclusion, however, the Full Court noted (at [26], [33]) that ‘it is by no means clear’ whether an application of this kind is a representative proceeding for the purpose of s 33ZB.

Though the judgment does not refer to Fernando, Rares J in Wotton v Queensland (2009) 109 ALD 534; [2009] FCA 758 reached an alternative view. His Honour determined (at [32], [33]) that an application for the extension of time would need to meet the criteria under s 33C(1) and those requirements were said not to be met in the absence of any ‘substantial common issue of law or fact’ advanced on behalf of the group members.

Res Judicata and Anshun Estoppel 28.10 The binding effect of a ‘judgment’ under s 33ZB to all those whom the applicant represents, makes class actions an efficient mechanism to resolve the claims of a large group. The principles of res judicata, issue and Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; 36 ALR 3; [1981] HCA 45) mean that individuals only have one opportunity to litigate their claims. The question of the extent to which those principles apply to representative proceedings, has now been considered by the High Court in Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 91 ALJR 37. In Timbercorp, the respondents were participants as group members in a representative proceeding brought against the applicant in 2009. The representative proceeding was unsuccessful and the applicant subsequently brought proceedings against the respondents claiming defaults under their loans and seeking repayment. The respondents raised defences in the second proceedings claiming that no loans were in fact advanced or concluded. The applicant sought to raise Anshun estoppels on the basis that it was unreasonable for the respondents to now argue that the loan agreements were not entered into. The issue was whether the respondents should be estopped from raising a defence in the recovery proceedings that could have, according to Timbercorp, been raised in the group proceeding. The court held (at [53]): The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding.

A conclusion that the representative capacity of a plaintiff in a group proceeding is limited to the claims giving rise to common questions is consistent with principles which underlie the concept of a privy in legal interest.

[page 428] The question that arose was the extent to which the plaintiff in group proceedings may be taken to represent the legal interest of the group members, or, as the court framed the question (at [36]): A person (the second party) who seeks to make a claim in later proceedings may be bound by the actions of a party in earlier proceedings if the party in those proceedings represented the second party such that they could be described as the privy in interest of the second party.

The first issue was whether the subject matter of the respondents’ claims was so connected to the subject matter of the group proceeding that it would be unreasonable for their claims not to have been made by the lead plaintiff in the proceeding. The second issue is whether the respondents, acting reasonably, should themselves have raised their claims. The court referred to the 2015 decision of Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [45]: In a passage in the joint reasons in Tomlinson v Ramsey Food Processing Pty Ltd, upon which the appellant relies, it was observed that traditional forms of representation which bind those represented to estoppels include representation by an agent, by a trustee, by a tutor or guardian and ‘representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding’. The joint reasons went on to say that ‘[t]o those traditional forms of representation can be added representation by a representative party in a modern class action’. These latter forms of representation, it was observed, are the subject of procedures such as opt in or opt out which guard against the collateral risks of representation, such as an estoppel. However, while that decision may be taken to acknowledge that such a relationship may arise, it was not necessary in Tomlinson to decide that issue definitively. Further, it does not answer the question of the extent to which a lead plaintiff represents the legal interests of group members and has an obligation to raise issues individual to their claims. According to the High Court, the answer to that question lies in the nature of representative proceedings and the extent to which commonality of interest may be pursued in it.

French CJ, Kiefel, Keane and Nettle JJ held (at [49]–[50]): These provisions identify the subject matter of a group proceeding as a claim which gives rise

to common questions of law or of fact. The plaintiff represents the group members with respect to their interests in that regard and the group members claim through the plaintiff to the extent of that interest. Their relationship is therefore that of privies in interest with respect to that claim.

[page 429] However, other provisions of Pt 4A also make plain that group members may have other, individual, claims which do not form part of the subject matter of the group proceeding.

After reviewing those provisions (ss 33Q and 33R), French CJ, Kiefel, Keane and Nettle JJ observed that Pt IVA creates its own form of statutory estoppel (at [52]): Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment ‘binds all persons who are such group members at the time the judgment is given’. In order to understand that to which the sgroup members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions.

Their Honours held (at [53]): The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding.

This left open the question of whether the respondents themselves should be estopped from raising the new defences because, acting reasonably, they should have (or could have) raised their own defences or opted out of the proceedings. The court was conscious of the lack of control that individual group members have over the conduct of the proceedings and concluded that there was not the required connection between the individual defences and the common issues in the class action. As such, the respondents were not precluded from raising their defences by reason of Anshun estoppel. The court determined that they had no obligation to opt out of the class action proceedings to preserve their claims, and also did not need to seek to raise their individual issues pursuant to s 33R at their own cost risk.

Following Timbercorp, the application of res judicata and Anshun estoppel appears to be limited to: the extent to which the representative proceedings gives rise to common questions of law or fact; potentially, where the issues sought to be raised in subsequent proceedings were so closely connected to the common questions of law or fact that they could have and should have been raised in the group proceedings or were fundamental to the judge’s decision in the group proceedings; [page 430] in a unique circumstance where it can be demonstrated that the group member had some degree of control over the proceedings such that they could have ensured the issues raised in the subsequent proceeding could have been raised in the group proceeding. 28.11 Earlier authorities had left open the possibility of a more robust application of the principles of res judicata, issue and Anshun estoppel. Moore J in Schanka v Employment National (Admin) Pty Ltd (2001) 114 FCR 379; [2001] FCA 1623 at [6] stated: It is important to consider the impact of the judgment on the group members whose substantive rights will be bound by it: Jenkins v NZI Securities (1994) 52 FCR 572 at 577. If the Court were to make orders now concerning only the named applicants, they would bind all group members other than those who have opted out: s 33ZB of the FCA Act. If other group members sought to pursue separately claims based on their individual circumstances, they may be subject to res judicata or issue estoppel. So as not to prejudice such claims, the Court should now allow the other group members an opportunity to be heard.

Moore J continued (at [16]–[17]): I am conscious that one of the purposes of Pt IVA is to enable the pursuit and efficient resolution of a claim on behalf of a group, where it may not be economically viable for group members to pursue the claim individually: see Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 264 [20]. Accordingly, it is important not to take an overly legalistic approach to Pt IVA: Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR ¶41-679 at 42,684 [49]. However, it was for the applicants to decide how claims were to be divided into common and individual issues and pursued in the Court. In the event, they elected to treat the entire question of

duress as a common issue and to resist any submission that in order to determine the issue of duress it was necessary to present evidence of all group members’ individual circumstances … In the absence of such a power [to make an order avoiding an AWA, which would have been a consideration towards the applicant being able to run the case in the manner suggested and preserve the individual group members’ rights], the only purpose served by not dismissing the application is to leave open the possibility of the applicants or individuals seeking penalties against ENA for contravening s 170WG. This, in my opinion, having regard to the history of the matter, provides an insufficient basis for not following the course proposed by ENA for the reasons it advanced. Accordingly, it is inappropriate that a notice be sent to group members under s 33X(5) or an order be made under s 33N. The applicants made no application to re-open their case. It is unnecessary to consider whether the applicants should be allowed to do so. The appropriate order, in my opinion, concerning the group members in relation to whom a contravention of s 170WG(1) has not been established is that the proceeding be otherwise dismissed.

[page 431] 28.12 In Mobil Oil Australia v Victoria, Callinan J acknowledged the potential application of res judicata (at [174]): … a group member will be bound by the judgment in the proceeding (s 33ZB). If the judgment finally determines the matter (for example, if there be a judgment for the defendant, or if damages be ordered in an aggregate sum) his or her damages and rights thereto would merge in that judgment. … There is another potential problem to which the plaintiff refers. Even if the judgment does not finally determine the matter, for example, if only a common question of law or fact is decided, the decision of law, or with respect to that fact, may give rise to a defence of res judicata between every member of the group and the defendant.

In Carnie v Esanda (1995) 182 CLR 398 at 423–4; 127 ALR 76; [1995] HCA 9, Toohey and Gaudron JJ also noted that: If the action, constituted as a representative action, succeeds those represented will have the benefit … But what if the action fails? Counsel for the appellant conceded that each of the members of the class would be ‘estopped’. … The relevant principle is stated in the following way by Spencer Bower and Turner: A judicial decision inter partes operates as an estoppel in favour of, or (as the case may be) so as to bind, … in the case of a ‘representative’ or ‘test’ action, all members of the class, whom a party purports to represent therein, … but not those who, though alleged to be so represented, insist and establish that they are not.

… In Zhang v Minister for Immigration, Local Government and Ethnic Affairs, French J ordered that the proceedings in the Federal Court should not continue as a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) because of implications of res judicata for other applications …

In Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384; 118 ALR 165, French J also stated (at FCR 405; ALR 185): The question of res judicata and the extended principle … remains. A judgment, once made on the common issue, is binding on all members of the group … That arises explicitly by virtue of s 33ZB(b). The question of whether the extended principle of res judicata is capable of application to representative proceedings confined as these have been to a common issue of law or fact remains open.

In Femcare v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [64], the court stated: s 33ZB of the Federal Court Act explicitly provides that a judgment in a representative proceeding binds all group members other than those who have opted out under s 33J. To that extent, Toohey and Gaudron JJ specifically

[page 432] accepted … that the principle of res judicata applies to representative proceedings under Pt 8, r 13(1) of the Supreme Court Rules and equivalent provisions. Their Honours saw no prejudice to members of the represented group being included, other than in ‘the obvious sense that they would be bound by a judgment acceding to or rejecting the claim for relief’.

28.13 The decision in Timbercorp means that the potential application of res judicata and estoppels is limited, but to the extent that it may still operate, it does mean that articulation of the common questions to be determined in a representative proceeding is important. The potential application of res judicata and estoppels means that group members may be prejudiced if the lead applicant fails on a common question or the lead applicant fails to establish sufficient evidence to enable a court to determine a common question. Recognising the potential injustice to group members of being bound by unfavourable outcomes, a recent practice has been adopted whereby the schedule of common questions ordered by the court to be determined at the

initial hearing includes, as a preliminary question, ‘Are any of the questions set out below common to the claims of the group members?’ The rationale appears in the Full Court’s decision in Merck Sharp & Dohme (Aust) v Peterson [2009] FCAFC 26 at [8], [12]: … it would be desirable to structure the ‘trial’ by identifying what might be the common issue for determination, though on the footing that if it became apparent from the evidence and the submissions that they were not common, they would not then be determined lest they be ‘an issue that relates only to the claims of [one particular] member’…. The draft orders proposed by Mr Peterson appeared to us to provide an appropriate template, although on the clear understanding that the orders would operate on the basis that, in relation to each alleged common issue, there would be a preliminary question about whether it was a common issue. Only if that question was answered in the affirmative would the common issue then be determined.

It follows that in a representative proceeding the court needs to distinguish between two outcomes: (a) truly non-common questions — questions which are incapable of being answered for all group members; and (b) common questions not proved — questions that are in fact common, but that the lead applicant has failed to establish through a lack of evidence.

Non-compliance 28.14 There is no authority as to whether a failure to comply with the requirements of s 33ZB(a) would render orders made in a representative proceeding ineffective. [page 433] In Fernando v Ruddock (as Minister for Immigration & Multicultural Affairs) [2000] FCA 1151, the Full Court noted (at [27]): It is not clear whether the absence of a description or identification of the group members in accordance with s 33ZB(a) deprives orders made in a representative proceeding of the binding effect they would otherwise have pursuant to s 33ZB(b).

• CASE LAW • 28.15

Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 (Hansen, Ferguson and McLeish JJA)

The applicant entered into three loan agreements with Great Southern Finance Limited (GSFL) to fund his investment in certain managed investment schemes, including the Wine Grape Income Project. The enforceability of various loan agreements involving the GSFL group was challenged in 16 group proceedings instituted under Supreme Court Act 1986 (Vic) Pt 4A. Each proceeding related to a different project undertaken by the group, including the three projects in which the applicant had invested. The applicant was a group member in each of the proceedings related to those projects. The respondent was a defendant in two of those proceedings, but was not joined as a defendant in the proceeding relating to the Wine Grape Income project. All 16 proceedings were heard together during 2012 and 2013, and the respondent participated in the trial. The proceedings were settled by execution of a deed of settlement and subsequently orders approving the deed of settlement were made pursuant to s 33V. The respondent appeared at the settlement approval hearing. The applicant was among a group of investors that appeared at the hearing and objected to the deed of settlement. The deed of settlement entitled the respondent, in default of specified steps being taken by a borrower, to enter judgment against that borrower in respect of the borrower’s loan balance, together with interest and an amount representing the respondent’s costs. In reliance on the deed, the respondent filed an originating motion seeking judgment against the applicant in respect of the loans for all three projects. A judge in the Commercial Court gave judgment in favour of the respondent on 17 September 2015. The applicant sought leave to appeal in respect of that judgment. Relevantly, the applicant contended that, inter alia, the deed of settlement was not binding upon him in respect of the amount claimed in relation to the Wine Grape Income project, as a result of the respondent not having been a party to the proceeding concerning the loans for that project.

[page 434] The applicant submitted that the trial judge erred in finding that it was not necessary for the respondent to be a party to the Wine Grape proceeding in order for it to acquire rights under the deed of settlement. The applicant submitted that the deed was only binding on the group members because of s 33ZB and that the respondent could not obtain the benefit of that provision in respect of a proceeding to which it was not a party. The respondent submitted that the fact that it was not a party to the Wine Grape proceeding was not relevant because the parties were free to compromise proceedings on terms extending beyond the pleaded issues. The fact that this was a settlement of group proceedings did not affect the analysis. Section 33ZB gave the settlement of all the group proceedings binding force as against the group members, and nothing more was required. The court noted that the settlement was binding on group members by virtue of the orders made by the court. Accordingly, it was the applicant’s argument that this binding force had the corollary that the settlement was only enforceable by parties to the group proceeding which was settled. Given that the respondent was not a party to the Wine Grape proceeding, it could not derive the statutory benefit of that settlement. The court rejected this argument because (at [58]–[59]): 1.

once it is approved by the court, the parties to a deed of settlement are bound that settlement by virtue of being parties to the deed. It is on this basis that the respondent was bound. By the further operation of the statute, whether directly through s 33ZB or indirectly by orders made under s 33ZF, group members become bound to the deed of settlement. The terms of the deed then apply to the group members and the other parties to the deed take the benefit of the obligations which group members thereby owe. But the rights of other contractual parties as against group members flow from the deed which the court has approved, not from such other contractual parties having been parties to the anterior proceeding. Their status as parties to the proceeding, or otherwise, is of no relevance. As the respondent submitted, persons who were not parties to the group proceeding at all may none the less be

2.

parties to the settlement of that proceeding; and it was not in doubt that the respondent was entitled to the benefit of the deed of settlement by virtue of its status as a party in group proceedings other than the Wine Grape proceeding. In that circumstance, there was no reason why, as part of the settlement of those proceedings to which the respondent was a party, the parties to the deed of settlement could not also settle other disputes, including disputes being litigated in proceedings to which the respondent was not a party. Having done so, the group members became bound by the settlement once the orders of the court were made.

The application for leave was refused. [page 435]

28.16

Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 91 ALJR 37 (French CJ, Kiefel, Keane, Nettle and Gordon JJ)

The respondents were group members in an unsuccessful class action proceeding brought against Timbercorp in the Supreme Court of Victoria under Supreme Court Act 1986 (Vic) Pt 4A, following the collapse of Timbercorp in 2009. The respondents did not elect to opt out of that group proceeding. Subsequently, Timbercorp brought recovery proceedings against the respondents for defaulting on their loan agreements (the subject of the class action). The issue was whether the respondents should be estopped from raising a defence in the recovery proceedings that could have, according to Timbercorp, been raised in the group proceeding (Anshun). The appellant submitted that an obvious connection between the respondents’ defences and the group proceeding is that they sought to achieve the same result, namely avoiding repayment of loan obligations. The question that arose was the extent to which the plaintiff in group

proceedings may be taken to represent the legal interest of the group members, or, as the court framed the question (at [36]): A person (the second party) who seeks to make a claim in later proceedings may be bound by the actions of a party in earlier proceedings if the party in those proceedings represented the second party such that they could be described as the privy in interest of the second party.

The first issue was whether the subject matter of the respondents’ claims was so connected to the subject matter of the group proceeding that it would be unreasonable for their claims not to have been made by the lead plaintiff in the proceeding. The second issue is whether the respondents, acting reasonably, should themselves have raised their claims. The court referred to the 2015 decision of Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [45]: In a passage in the joint reasons in Tomlinson v Ramsey Food Processing Pty Ltd, upon which the appellant relies, it was observed that traditional forms of representation which bind those represented to estoppels include representation by an agent, by a trustee, by a tutor or guardian and ‘representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding’. The joint reasons went on to say that ‘[t]o those traditional forms of representation can be added representation by a representative party in a modern class action’. These latter forms of representation, it was observed, are the subject of procedures such as opt in or opt out which guard against the collateral risks of representation, such as an estoppel.

[page 436] However, while that decision may be taken to acknowledge that such a relationship may arise, it was not necessary in Tomlinson to decide that issue definitively. Further, it does not answer the question of the extent to which a lead plaintiff represents the legal interests of group members and has an obligation to raise issues individual to their claims. According to the High Court, the answer to that question lies in the nature of representative proceedings and the extent to which commonality of interest may be pursued in it.

French CJ, Kiefel, Keane and Nettle JJ held at [49]–[50]: These provisions identify the subject matter of a group proceeding as a claim which gives rise to common questions of law or of fact. The plaintiff represents the group members with respect to their interests in that regard and the group members claim through the plaintiff to the extent of that interest. Their relationship is therefore that of privies in interest with respect to that claim.

However, other provisions of Pt 4A also make plain that group members may have other, individual, claims which do not form part of the subject matter of the group proceeding.

After reviewing those provisions (ss 33Q and 33R), French CJ, Kiefel, Keane and Nettle JJ observed that Pt IVA creates its own form of statutory estoppel (at [52]): Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment ‘binds all persons who are such group members at the time the judgment is given’. In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions.

Their Honours held (at [53]): The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding.

This left open the question of whether the respondents themselves should be estopped from raising the new defences because, acting reasonably, they should have (or could have) raised their own defences or opted out of the proceedings. The court was conscious of the lack of control that individual group members have over the conduct of the proceedings and concluded that there was not the required connection between the individual defences and the common issues in the class action. As such, the respondents were not precluded from raising their defences by [page 437] reason of Anshun estoppel. The court determined that they had no obligation to opt out of the class action proceedings to preserve their claims, and also did not need to seek to raise their individual issues pursuant to s 33R at their own cost risk.

28.17

Schanka v Employment National (Admin) Pty Ltd (2001) 114 FCR 379; 110 IR 97; [2001] FCA 1623 (Moore J)

The applicants brought representative proceedings under Pt IVA alleging that the respondent had contravened Workplace Relations Act 1996 (Cth) s 170WG(1) by applying duress to the applicants in connection with an Australian Workplace Agreement. At trial, the judge found that duress had been applied to three of the applicants and one group member, and adjourned the proceedings to enable the parties to make submissions on the appropriate orders. The applicants sought an order that a notice be sent to the other group members under s 33X(5) informing them of the reasons for judgment in the earlier proceedings and inviting them to make submissions about the further conduct of the proceedings before orders were made. The applicants submitted that as the proceedings were commenced as a representative proceeding on behalf of a group of several hundred employees, it would have been impractical and contrary to the purpose of Pt IVA to present evidence, at the outset, of the individual circumstances of every group member; and that it was important to consider the impact of the judgment on the group members whose substantive rights would be bound by it: Jenkins v NZI Securities Ltd at 577. 28.18 If the court were to make orders concerning only the named applicants, pursuant to s 33ZB the orders would bind all group members other than those who have opted out, so that if other group members pursued separate claims based on their individual circumstances, they may be subject to res judicata or issue estoppel. So as not to prejudice such claims, the applicants submitted that the court should allow the other group members an opportunity to be heard, in accordance with the principle articulated by French J in Zhang v Minister for Immigration, Local Government and Ethnic Affairs at 405: In a case in which the group members have not raised individual claims but have been defined into the group on their related circumstances and the common issue, it is necessary

that care be taken to ensure that claims based on individual circumstances of which the Court knows nothing are not prejudiced.

28.19 The respondent opposed the issuing of a notice and submitted that the application was, in substance, an application to reopen the case, and the weight of discretionary considerations was against the application. As such, the respondent argued that orders should be made with respect to the named applicants and the one group member and that the proceedings should be otherwise dismissed. Moore J concluded that in light of the way the case was conducted, it should have been apparent to the applicants at the outset of proceedings that evidence of individual circumstances might be necessary, and as such, Moore J held it was [page 438] inappropriate to order that a notice be issued, and ordered that the proceedings be otherwise dismissed: at [8], [17].

28.20

Mobil Oil Australia v Victoria (2002) 211 CLR 1; 189 ALR 161; [2002] HCA 27 (Gleeson CJ, Gaudron, Gummow, Kirby, Hayne and Callinan JJ)

Mobil Oil Australia Pty Ltd commenced proceedings in the High Court of Australia against the state of Victoria and Tasfast Air Freight Pty Ltd (Tasfast) alleging that the enactment of Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 (Vic) s 13, which inserted Pt 4A into the Supreme Court Act 1986 (Vic) which deals with group proceedings, was beyond the legislative power of the Parliament of Victoria and was therefore invalid. The plaintiff submitted that pursuant to s 33ZB, a group member will be bound by the judgment in the proceedings, and if the judgment finally determines the matter, a group member’s damages and rights thereto would

merge in that judgment. It is possible that a group member pursuing a claim in another Supreme Court under a different regime might have their damages assessed in a greater sum than assessed in Victoria, or than would be available on a division of an aggregate sum or a settlement fund administered by the Supreme Court of Victoria. Further, even if the judgment does not finally determine the matter (for example, if only a common question of law or fact is decided), that decision may give rise to a defence of res judicata between every group member and the defendant. A group member seeking to commence proceedings against the defendant following the determination of the group proceeding based on a different cause of action will arguably at least have to overcome an estoppel argument if the claim could have been pursued in the group proceeding. 28.21 Callinan J stated (at [190]) that Pt 4A should be read down so that its operation is confined to group members: resident in Victoria; carrying on business in Victoria; registered or incorporated in Victoria; or wherever resident, registered or carrying on business outside Victoria, positively electing (and not merely not opting out) to be group members in cases in which, by reason of service there, or for other good and settled principle of common law, or by statute, the defendant is amenable to the jurisdiction of the Supreme Court of Victoria. Ultimately, it was held by the High Court of Australia (at [196]) that Supreme Court Act 1986 (Vic) Pt 4A should be regarded as a valid enactment of the Parliament of Victoria, subject to the above qualifications enunciated by Callinan J. In the course of deciding that issue, Callinan J observed (at [174]): … a group member will be bound by the judgment in the proceeding (s 33ZB). If the judgment finally determines the matter (for example, if there be a

[page 439]

judgment for the defendant, or if damages be ordered in an aggregate sum) his or her damages and rights thereto would merge in that judgment. … There is another potential problem to which the plaintiff refers. Even if the judgment does not finally determine the matter, for example, if only a common question of law or fact is decided, the decision of law, or with respect to that fact, may give rise to a defence of res judicata between every member of the group and the defendant.

28.22

Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398; 127 ALR 76; [1995] HCA 9 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ)

These proceedings involved two borrowers suing their lender claiming that various matters had not been disclosed in the loan contract between them, in contravention of the Credit Act 1984 (NSW). As a result, they alleged that they were not liable to pay the credit charge provided by the contract. The borrowers claimed to sue on their own behalf and on behalf of all other persons who had entered into loan contracts with the lender that had the same characteristics as their contracts. A question arose as to the effect of a judgment in these proceedings, if constituted as a representative action. The court stated that if a representative action succeeds, those represented will have the option to take advantage of declaratory relief. Alternatively, if the action fails, each of the members of the class will be estopped, and in theory would lose the right to not have to pay the credit charges under the contract: at 423. 28.23 The relevant principle is that a judicial decision in a representative action inter partes operates as an estoppel in favour of, or (as the case may be) to bind all members of the class whom a party purports to represent, but not those who are alleged to be group members but insist and establish that they are not. Toohey and Gaudron JJ stated that nothing had emerged in these proceedings to show that members of the class would be prejudiced by the outcome of this action other than in the obvious sense that they would be bound by a judgment: at 424. The outcome of the proceedings would not affect other rights group members might have against the respondent. However, if it did appear that other rights of the group members would be

affected, this would be a matter for the court’s consideration in determining what orders should be made, but not in deciding whether the action is properly constituted.

28.24 Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384; 118 ALR 165 (French J) The applicant in these proceedings, Mr Ruihua Zhang (along with his wife and adult children), applied to the respondent for a determination that he was a [page 440] refugee. Mr Zhang was refused refugee status and the determination was confirmed upon reconsideration. The applicant filed an application under Administrative Decisions (Judicial Review) Act 1977 (Cth) s 15 and Judiciary Act 1903 (Cth) s 39B as a representative action pursuant to Pt IVA, contending that his action related to all those who had been refused refugee status since 4 March 1992 and who had received a negative review of their refugee applications by the Refugee Status Review Committee on or before 30 June 1993. 28.25 French J explained that once a judgment is made on the common issue, by virtue of s 33ZB(b) that judgment is binding on all members of the group and on the Minister. However, his Honour went on to make a number of observations about the role of res judicata and Anshun estoppel in the context of representative proceedings (at FCR 401–4; ALR 181–4): In the Prudential Assurance case, it was considered that a representative action could properly be brought for declaratory relief based on the commission of a tort and that the declaration could give rise to a res judicata in respect of a subsequent separate action for damages. The possible impact on representative actions of the doctrine of res judicata and the extended principle discussed in Port of Melbourne Authority v. Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, however, requires careful consideration. In the Second Edition of Spencer Bower and Turner, The Doctrine of Res Judicata (1969) at para. 231, it is pointed out that, in

the case of a representative action, a judicial decision inter partes operates as an estoppel in favour of or so as to bind all members of the class whom a party purports to represent or all persons who have given their consent to be bound by the result. The operation of the doctrine was discussed by the Supreme Court of Canada in Naken v. General Motors of Canada Ltd (1983) 144 DLR 385. The action was for breach of collateral warranty by a manufacturer of a particular model of automobile and claimed a fixed sum of $1,000 damages for each member of the class, being purchasers of the vehicles in 1971 and 1972. It was brought under r. 75 of the Rules of Practice of the Supreme Court of Ontario which substantially reflected the terms of O. 16 r. 9 of the Rules of the Supreme Court of the United Kingdom. Holding that the action could not be framed as a representative action under r. 75 but must proceed as a joined action brought by several named plaintiffs, Estey J, who delivered the judgment of the Court, said: The operation of the defence of res judicata has a long history in our courts, and no authority was drawn to the attention of the court wherein a court ignored such a plea in the case of a class action. It is true that there is a discretion in the courts where the defence of res judicata is raised, but such a discretion must be very limited in application … Rule 75 is silent as to the issue, and, failing some specific provision by statute, regulation or otherwise, the defence of res judicata would continue to apply. The fact that the action may be in contract of one kind or another would appear to represent no basis for the selective application of the defence of res judicata. If the courts were to adopt a principle whereby class actions estopped participants from future action only to the extent

[page 441] of claims made in the class action, one of the root purposes of the class action would be defeated. The inherent benefit of the representative action sadly produces this serious side effect. This is no doubt the most important factor which excited legislatures elsewhere to action in defining and describing this action and its conduct. (at p 406–407) The issue has arisen in class actions in the United States under Rule 23 of the Federal Rules of Civil Procedure. The doctrine of res judicata has been held to apply to Title VII AntiDiscrimination actions — Cooper v. Federal Reserve Bank of Richmond [1984] USSC 141; 104 S Ct 2794 (1984); EEOC v. Childrens Hospital Medical Centre 702 F 2d 188 (9th Circuit); Johnson v. General Motors Corporation [1979] USCA5 1028; 598 F 2d 432 (5th Cir 1979). See also Bodensteiner, Application of Preclusion Principles to S.1983 Damage Actions after a Successful Class Action for Equitable Relief (1983) 17 Valparaiso Law Rev. 347; Hulsmore, EEOC v. Childrens Hospital Medical Centre — The Res Judicata Effect of a Class Action Consent Decree on the Title VII Rights of Future Employees Included in the Class. (1985) 1 Journal on Dispute Resolution 121. See also Rice — 26 South Texas Law J 614; Hunter (1980) 11 St. Mary’s Law J 1023; Collins (1985) 27 Boston College Law Rev 173….

A challenge to the lawfulness of an administrative policy or practice affecting the exercise of statutory power may raise, as does this case, a narrow point for decision. Individual claims in relation to particular determinations under the power are left unheard if the representative action fails. The possibility arises of the extended principle of res judicata affecting issues wider than those ventilated in the representative proceeding. Having regard to that possibility, the utility of the representative action in judicial review requires scrutiny. The question must be asked in each case whether members of the group and the decision-makers are likely to be better off with a determination which binds them all on one issue but fails to deal with individual claims. Where the lawfulness of a policy is contested by an individual, that test case may, pending an appeal, establish the law. However, it does not provide as firm a bulwark against re-litigation of the same point in like cases as does the determination in representative proceedings which directly binds the decision-maker and members of the group. The costs and benefits of representative proceedings in the area of judicial review will have to be assessed on a case by case basis.

28.26 French J noted that the issue whether the extended principle of res judicata is capable of application to representative proceedings confined to a common issue of law or fact remains unresolved (at FCR 405–6; ALR 185– 6): The question of res judicata and the extended principle to which I have referred earlier remains. A judgment, once made on the common issue, is binding on all members of the group and on the Minister. That arises explicitly by virtue of s. 33ZB(b). The question whether the extended principle of res judicata is capable of application to representative proceedings confined as these have been to a common issue of law or fact remains open. Section 33Q contemplates the hiving off of individual claims when the common

[page 442] determination does not finally determine the claims of all group members. That may support a view that the extended principle may operate when the claims are not hived off under that section. In a case in which the group members have not raised individual claims but have been defined into the group on their related circumstances and the common issue, it is necessary that care be taken to ensure that claims based on individual circumstances of which the Court knows nothing are not prejudiced. In my opinion, that concern may be dealt with by determining the common issue and giving judgment on that issue as required by s. 33ZB. Thereafter, I am inclined to make an order under s. 33N(1)(d) that the proceeding otherwise no longer continue under Pt. IVA. While Mr Zhang’s claim will be disposed of, the claims, if any, of other members of the group to set aside the decisions affecting them individually may be pursued by their individual applications.

28.27

Femcare Ltd v Bright

(2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 (Black CJ, Sackville and Emmett JJ) The respondent to this appeal, Ms Kerrie Bright, commenced representative proceedings pursuant to Pt IVA claiming compensation for injury, loss and damage on behalf of herself and a group of other women who were alleged to have undergone a sterilisation procedure using goods known as ‘Filshie applicators’ and ‘Filshie clips’ manufactured by Femcare Limited, the appellant in this appeal. Femcare contended (at [30], [39]–[40]) that Pt IVA or ss 33J and 33ZB are constitutionally invalid because, contrary to Constitution of the Commonwealth (Constitution) Ch III, they purport to authorise the court to: (a) exercise power in a manner not in accordance with ‘judicial process’, which fails to ensure that group members receive adequate notice of the representative proceeding, yet they will be bound by an adverse determination by operation of s 33ZB; (b) make adjudications on issues or questions where there is no ‘matter’ in the constitutional sense, as the individuals affected are not in dispute with the respondents because they: (i) are unaware of the representative proceeding; (ii) have no right to claim because their cause of action has not yet accrued; or (iii) do not wish to be involved in the litigation; and (c) exercise power in relation to preliminary common questions of fact and law in a ‘hypothetical’ manner. 28.28 The court dismissed Femcare’s appeal and held that Pt IVA, ss 33J and 33ZB are constitutionally valid as: (a) Part IVA does not purport to confer jurisdiction and power on the court which is inconsistent with the separation of judicial power required by Constitution Ch III: at [63], [65], [75], [84]–[86], [91]–[93].

[page 443] (b) A representative proceeding, if properly constituted in accordance with Pt IVA, does not fall outside the concept of a ‘matter’ in Constitution Ch III (at [104]) and further, the principle of res judicata will apply: Carnie v Esanda Finance Corporation Ltd at 423–4 per Toohey and Gaudron JJ. There is no foreseeable prejudice to members of the represented group in being included, other than in the ‘obvious sense that they would be bound by a judgment’: at [64]. The effect of an adverse decision is simply that the group member has no such right as he or she claims. (c) The questions required to be determined in a proceeding under Pt IVA are not hypothetical, but rather are true questions that arise in respect of each group member’s claim: at [105]. As such, Pt IVA should not be construed as authorising the determination of a hypothetical question merely because there might be difficulties in determining whether there are questions common to the claims of all group members: at [107].

28.29

Merck Sharp & Dohme (Aust) v Peterson [2009] FCAFC 26 (Moore, Sundberg and Tracey JJ)

Representative proceedings were commenced by Mr Graeme Peterson against Merck Sharp & Dohme (Australia) Pty Ltd (Merck), in which Merck sought an order under s 33ZF requiring Mr Peterson to specify ‘each of the matters that the Court is being invited to determine for all alleged group members through a trial of the Applicant’s claim’: at [1]. Moore, Sundberg and Tracey JJ stated that it is desirable, if not necessary, to identify precisely what issues will be determined at trial, on the assumption that at the end of the trial the applicant’s claim (personal to him) will be determined, and orders will be made which reflect the determination made by the trial judge on both questions of fact and law. As Sackville J did in Courtney v Medtel Pty Ltd (2003) 126 FCR 219, an order can be made identifying Mr Peterson’s individual claim as a matter (entailing questions of fact and law) to which the trial will be directed: at [6].

28.30 The court stated that in a representative proceeding pursuant to Pt IVA, the court should (at least in proceedings involving a sizable group where liability may depend on each member’s individual circumstances) initially deal with issues that are common to all or a sub-group of group members. However, in these proceedings, Merck disputed that the issues pleaded in the applicant’s statement of claim were common questions: at [7]. The court held that given there was controversy about what the common issues for determination were, if those issues were framed as questions, orders could be made answering them. At that point, a party disaffected by the determination would be in a position to challenge those answers by way of appeal pursuant to s 33ZC. [page 444] The possible outcomes discussed by the court were: (a) the applicant fails in his own personal case and such issues as were found to be common either were not answered at all or, in some critical respect, were answered in a way propounded by Merck; or (b) the applicant succeeds in his own personal case and such issues as were found to be common were answered either in whole or in part in a way propounded by Mr Peterson. The court concluded (at [8]): It seems to us that given that there is controversy about what are the common issues, it would be desirable to structure the ‘trial’ by identifying what might be the common issues for determination, though on the footing that if it became apparent from the evidence and the submissions that they were not common, they would not then be determined lest they be ‘an issue that relates only to the claims of [one particular] member’. If the issues are framed as questions, orders can be made answering them. At that point a party disaffected by the determination would be in a position to challenge those answers by way of appeal as contemplated by s 33ZC(1). Broadly described, one outcome could be that Mr Peterson failed in his own personal case and such issues as were found to be common either were not answered at all or, in some critical respect, were answered in a way propounded by Merck. Alternatively, another outcome, broadly described, could be that Mr Peterson succeeded in his own personal case and such issues as were found to be common were answered either in whole or in part in a way propounded by Mr Peterson. In the former situation and probably

in the latter, it would be desirable that the disaffected party then had the opportunity to challenge the trial judge’s conclusions if so minded. Certainly in the latter case it is probably desirable that such a challenge occur before the circumstances of other individual members of the group were then considered. If there is no judgment, in a technical sense, at the end of the trial then the disaffected party would not be in a position to maintain such a challenge.

[page 445]

CHAPTER 29 Appeals to the Court: s 33ZC • OVERVIEW • Section 33ZC addresses a number of procedural issues concerning appeals in representative proceedings.

• LEGISLATION • Section 33ZC, Federal Court of Australia Act 1976 (Cth) Appeals to the Court (1) The following appeals under Division 2 of Part III from a judgment of the Court in a representative proceeding may themselves be brought as representative proceedings: (a) an appeal by the representative party on behalf of group members and in respect of the judgment to the extent that it relates to issues common to the claims of group members; (b) an appeal by a sub-group representative party on behalf of subgroup members in respect of the judgment to the extent that it relates to issues common to the claims of sub-group members. (2) The parties to an appeal referred to in paragraph (1)(a) are the representative party, as the representative of the group members, and the respondent. (3) The parties to an appeal referred to in paragraph (1)(b) are the subgroup representative party, as the representative of the sub-group

members, and the respondent. (4) On an appeal by the respondent in a representative proceeding, other than an appeal referred to in subsection (5), the parties to the appeal are: (a) in the case of an appeal in respect of the judgment generally— the respondent and the representative party as the representative of the group members; and (b) in the case of an appeal in respect of the judgment to the extent that it relates to issues common to the claims of sub-group members—the respondent and the sub-group representative party as the representative of the sub-group members. [page 446] (5) The parties to an appeal in respect of the determination of an issue that relates only to a claim of an individual group member are that group member and the respondent. (6) If the representative party or the sub-group representative party does not bring an appeal within the time provided for instituting appeals, another member of the group or sub-group may, within a further 21 days, bring an appeal as representing the group members or sub-group members, as the case may be. (7) Where an appeal is brought from a judgment of the Court in a representative proceeding, the Court may direct that notice of the appeal be given to such person or persons, and in such manner, as the Court thinks appropriate. (8) Section 33J does not apply to an appeal proceeding. (9) The notice instituting an appeal in relation to issues that are common to the claims of group members or sub-group members must describe or otherwise identify the group members or sub-group members, as the case may be, but need not specify the names or number of those members.

Section 33ZC, Supreme Court Act 1986 (Vic) Appeals (1) On an appeal by the plaintiff on behalf of group members and in respect of the judgment to the extent that it relates to questions common to the claims of group members, the parties to the appeal are the plaintiff, as the representative of the group members, and the defendant. (2) On an appeal by a sub-group representative party on behalf of subgroup members in respect of the judgment to the extent that it relates to questions common to the claims of sub-group members, the parties to the appeal are the sub-group representative party, as the representative of the sub-group members, and the defendant. (3) On an appeal by the defendant in a group proceeding, other than an appeal referred to in subsection (4), the parties to the appeal are— (a) in the case of an appeal in respect of the judgment generally— the defendant and the plaintiff as the representative of the group members; and (b) in the case of an appeal in respect of the judgment to the extent that it relates to questions common to the claims of sub-group members—the defendant and the sub-group representative party as the representative of the sub-group members. [page 447] (4) The parties to an appeal in respect of the determination of a question that relates only to a claim of an individual group member are that group member and the defendant. (5) If the plaintiff or the sub-group representative party does not commence an appeal within the time provided, another member of the group or sub-group may, within a further 21 days, commence an appeal as representing the group members or sub-group members, as

the case may be. (6) If an appeal is brought from a judgment of the Trial Division in a group proceeding, the Court of Appeal may direct that notice of the appeal be given to such person or persons, and in such manner, as that court thinks fit. (7) Section 33J does not apply to an appeal. (8) The notice of appeal must describe or otherwise identify the group members or sub-group members, as the case may be, but need not specify the names or number of those members.

Section 180, Civil Procedure Act 2005 (NSW) Appeals (1) The following appeals from a judgment of the Supreme Court in representative proceedings may (subject to the rules of court) themselves be brought in the Court of Appeal under section 101 of the Supreme Court Act 1970 as representative proceedings: (a) an appeal by the representative party on behalf of group members and in respect of the judgment to the extent that it relates to questions common to the claims of group members, (b) an appeal by a sub-group representative party on behalf of subgroup members in respect of judgment to the extent that it relates to questions common to the claims of sub-group members. (2) The parties to an appeal in respect of the determination of a question that relates only to the claim of an individual group member are that group member and the defendant. (3) If the representative party or the sub-group representative party does not bring an appeal within the time provided for instituting appeals, another member of the group or sub-group may, within a further 21 days, bring an appeal as representing the group members or sub-group members, as the case may be.

(4) If an appeal is brought from the judgment of the Court in representative proceedings, the Court of Appeal may direct that notice of the appeal be given to such person or persons, and in such manner, as it considers appropriate. [page 448] (5) This Part (other than section 162) applies to any such appeal proceedings despite the provisions of any other Act or law. (6) The notice instituting an appeal in relation to questions that are common to the claims of group members or sub-group members must describe or otherwise identify the group members or sub-group members, as the case may be, but need not specify the names or number of those members.

Section 103Y, Civil Proceedings Act 2011 (Qld) Appeals (1) An appeal from a judgment of the court under this part may be brought as a representative proceeding. (2) The parties to the appeal are— (a) for an appeal by a representative party in respect of the judgment to the extent it relates to issues common to the claims of the group members—the representative party, as the representative of the group members, and the defendant; or (b) for an appeal by a sub-group representative party in respect of the judgment to the extent it relates to issues common to the claims of the sub-group members—the sub-group representative party, as the representative of the sub-group members, and the defendant; or (c) for an appeal by an individual group member in respect of the judgment to the extent it relates to an issue relating only to the

claim of the group member—the group member and the defendant; or (d) for an appeal by the defendant in respect of the judgment generally—the defendant and the representative party as the representative of the group members; or (e) for an appeal by the defendant in respect of the judgment to the extent it relates to issues common to the claims of sub-group members—the defendant and the sub-group representative party as the representative of the sub-group members; or (f) for an appeal by the defendant in respect of the judgment to the extent it relates to an issue relating only to the claim of an individual group member—the defendant and the group member. (3) If a representative party or sub-group representative party does not start an appeal within the time for starting the appeal, another member of the group or sub-group may, within a further 21 days, start an appeal on behalf of the group members or sub-group members. (4) If an appeal from the judgment of the court in a representative proceeding is started, the Court of Appeal may direct that notice of the appeal be given to the person or persons, and in the way, the Court of Appeal considers appropriate. [page 449] (5) This part, other than section 103G, applies to an appeal started under this section despite any other Act or law. (6) the notice of appeal for an appeal relating to issues that are common to the claims of group members or sub-group members must describe or otherwise identify the group members or sub-group members, but need not name or state the number of the members.

• COMMENTARY • 29.1 Section 33ZC addresses a number of procedural issues concerning appeals in representative proceedings. It addresses: (a) (b) (c) (d)

who can appeal and who is a party to an appeal; who is bound by an appeal; notice to group members; and confirms that there is no entitlement to opt out of an appeal.

Appeals are Representative Proceedings 29.2 Section 33ZC(1) makes it clear that appeals from a judgment in a representative proceeding may themselves be brought as representative proceedings. The New South Wales and Queensland provisions are similarly worded. The Victorian provision does not contain such a subsection although there is little doubt that the same principle applies.

Parties to an Appeal 29.3

Section 33ZC specifies who the parties to an appeal will be:

Nature of appeal Appeal from a judgment in a representative proceeding on behalf of all group members Appeal from a judgment in a representative proceeding on behalf of a sub-group of members

Parties Representative party Respondent

Federal Court Provision Section 33ZC(2)

Sub-group representative party

Section 33ZC(3)

Respondent

See Szabo v Dasford Holdings Pty Ltd (2002) 196 ALR 625; [2002] FCA 1438 at [27]–[29]; an appeal by a sub-group was permitted.

[page 450] Nature of appeal

Parties

Federal Court Provision

Appeal by respondent involving all group members Appeal by respondent involving sub-group members Appeal in respect of an issue relating only to a claim of an individual group member

Representative party Respondent Sub-group representative party Respondent Group member Respondent

Section 33ZC(4) Section 33ZC(4) Section 33ZC(5) This does not entitle any individual group member to appeal, but rather allows an individual who had an individual issue determined by the court at first instance to appeal.

The Victorian, New South Wales and Queensland provisions operate in the same manner.

Group Members Can Appeal 29.4 Section 33ZC(6) provides for a group member to be able to appeal where a representative party or sub-group representative party does not appeal within the specified time. A group member has a further 21 days within which to institute an appeal. The same procedure is adopted in Victoria and New South Wales. An example of a group member utilising the right to appeal under s 33ZC(6) arose in Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572; 124 ALR 605 at 607. The representative proceeding was brought by Mr Poignand. Mr Poignand did not lodge an appeal. The appellant on appeal was a unit holder in the trust and a group member who had not opted out. She brought the appeal as representative of the group members, pursuant to s 33ZC(6). See also Virk Pty Ltd v Yum! Restaurants Australia Pty Ltd [2016] FCA 1468 at [4]–[5], where group members were franchisees under a franchise agreement with the respondent to operate a Pizza Hut outlet in Australia as at 1 July 2014. The applicant at first instance, Diab Pty Ltd, did not seek to appeal. Virk Pty Ltd, a group member at first instance, did, pursuant to s 33ZC(6). In Fernando v Ruddock [2000] FCA 1151, Sackville, Katz and Kenny JJ dealt with the situation where the representative party could not be located. Their Honours observed (at [13]): [Section 33ZC(6)] provides that if the representative party in a representative proceeding

does not bring an appeal within the time provided for instituting appeals, another member of the represented group may, within a further

[page 451] twenty-one days, bring an appeal as representing the group members. Once the solicitor representing Mr Wasantha became aware that he (Mr Wasantha) could not be located within the period prescribed by FCR, O 52 r 15(1) in order to give instructions for an appeal, the solicitor had a further twenty-one days in which to receive and implement instructions from another member of the represented group to institute the appeal.

See also Chen Zhen Zi v Minister for Immigration & Ethnic Affairs (1994) 48 FCR 591; 121 ALR 83. In Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98, the Full Court considered the interaction between the definition of ‘representative proceeding’ in s 33A and the use of that phrase in s 33ZC (Chapter 29). The court noted that s 33A provides that, unless the contrary intention appears, ‘representative proceeding’ in Pt IVA means a proceeding commenced under s 33C. In Treasury Wines, the Full Court was considering an appeal, purportedly brought by a group member as a representative proceeding, on behalf of all other group members. The court noted that the applications for leave did not meet the description in s 33A because they were not commenced under s 33C. However, while the court ultimately did not have to determine the issue, they observed that (at [8]) ‘it is also arguable that s 33ZC indicates a contrary intention in relation to the meaning of “representative proceeding”, such that it is not restricted to the meaning in s 33A’. Further, the court stated (at [9]): If the expression ‘representative proceeding’ in s 33ZC(1) only means a proceeding commenced pursuant to s 33C it can be seen to exclude proceedings such as applications for leave to appeal and for leave to appeal out of time. That construction of s 33ZC(1) would seriously reduce the ability of representative parties, sub-group representatives and group members to bring appeals on a representative basis as it would mean that an appeal from an interlocutory decision or an appeal out of time could only be brought in a personal capacity, and not on behalf of group members. There is nothing in s 33ZC, or in Part IVA, to indicate a Parliamentary intention to so restrict the right to appeal in representative proceedings.

It has been noted that s 33ZC(6) is one of the few provisions in the legislation which contemplate group members acting on their own motion:

see Timbercorp Finance Pty Ltd (in liq) v Collins and Tomes [2015] VSC 461 at [542].

Notice 29.5 Section 33Z(7) allows for the court to give notice of an appeal in a representative proceeding but it is not compulsory. An appeal would not ordinarily require group members to take any steps and so no notice would typically be required. This is reinforced by s 33Z(8), which provides that the right to opt out does not apply in relation to an appeal. [page 452]

No Opt Out 29.6 Section 33Z(8) provides that s 33J does not apply to an appeal proceeding. This means that group members do not have a right to ‘opt out’ of the proceedings if there is an appeal. If a group member could opt out then a number of inconveniences could arise. Group members who were successful at first instance may not wish to be part of an appeal by a respondent that seeks to overturn that outcome.

Group Definition 29.7 Section 33Z(9) mirrors the requirement in s 33H(1)(a) that the originating process for an appeal must describe the group members to whom the appeal proceeding relates.

• CASE LAW • 29.8

Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd

[2017] FCAFC 98 (Jagot, Yates and Murphy JJ) The Full Court considered the interaction between the definition of ‘representative proceeding’ in s 33A and the use of that phrase in s 33ZC (Chapter 29). The court noted that s 33A provides that, unless the contrary intention appears, ‘representative proceeding’ in Pt IVA means a proceeding commenced under s 33C. In Treasury Wines, the Full Court was considering an appeal, purportedly brought by a group member as a representative proceeding, on behalf of all other group members. The court noted that the applications for leave did not meet the description in s 33A because they were not commenced under s 33C. However, while the court ultimately did not have to determine the issue, they observed that (at [8]) ‘it is also arguable that s 33ZC indicates a contrary intention in relation to the meaning of “representative proceeding”, such that it is not restricted to the meaning in s 33A’. Further, the court stated (at [9]): If the expression ‘representative proceeding’ in s 33ZC(1) only means a proceeding commenced pursuant to s 33C it can be seen to exclude proceedings such as applications for leave to appeal and for leave to appeal out of time. That construction of s 33ZC(1) would seriously reduce the ability of representative parties, sub-group representatives and group members to bring appeals on a representative basis as it would mean that an appeal from an interlocutory decision or an appeal out of time could only be brought in a personal capacity, and not on behalf of group members. There is nothing in s 33ZC, or in Part IVA, to indicate a Parliamentary intention to so restrict the right to appeal in representative proceedings.

[page 453]

29.9

Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572; 124 ALR 605; ATPR 41-349 (Beaumont, Gummow and Carr JJ)

On 17 June 1992, Mr Poignand filed an application under Pt IVA as a representative of Ripoll, as the former trustee of the DYV Unit Trust (the

trust), Rosewick Pty Ltd (Rosewick) (the successor as trustee), unit holders in the trust and guarantors of the liabilities of the trustee to the first and second respondents. In that application and the statement of claim filed with it, it was claimed, to the extent relevant to the appeal: that NZI Securities and NZI Cap Corp had engaged in conduct which was misleading or deceptive or was likely to mislead or deceive contrary to Trade Practices Act 1974 (Cth) s 52; and that by doing so they had induced (a) Ripoll to enter into the facility agreement and security documents ancillary thereto and (b) the guarantors to guarantee payment by Ripoll of sums due by it under the finance facility agreement. Issue (b), directed to the guarantors, was set apart from the issues that went to trial. The primary judge held that neither NZI Securities nor NZI Cap Corp had contravened s 52 in connection with the entry or proposed entry by Ripoll into the arrangement for the finance facility. The applicant, Mr Poignand, did not lodge an appeal. The appellant was a unit holder in the trust and a group member who had not opted out. She brought the appeal as representative of the group members, pursuant to s 33ZC(6).

[page 455]

CHAPTER 30 Appeals to the High Court: s 33ZD •OVERVIEW • Section 33ZD extends the operation of ss 33ZC (Chapter 29) and 33ZF (Chapter 32) to appeals to the High Court in relation to representative proceedings. No equivalent provision exists in the Victorian legislation (Supreme Court Act 1986 (Vic) s 33ZD deals with costs), the New South Wales legislation or the Queensland legislation.

• LEGISLATION • Section 33ZD, Federal Court of Australia Act 1976 (Cth) Appeals to the High Court—extended operation of sections 33ZC and 33ZF (1) Sections 33ZC and 33ZF apply in relation to appeals to the High Court from judgments of the Court in representative proceedings in the same way as they apply to appeals to the Court from such judgments. (2) Nothing in subsection (1) limits the operation of section 33 whether in relation to appeals from judgments of the Court in representative proceedings or otherwise.

• COMMENTARY •

High Court Appeals are Representative Proceedings 30.1 Section 33ZC(1) makes it clear that appeals from a judgment in a representative proceeding may themselves be brought as representative proceedings. Section 33ZD extends this to appeals to the High Court.

Parties to an Appeal 30.2

See ss 33ZC(2), (3), (4) and (5). [page 456]

Group Members Can Appeal 30.3

See s 33ZC(6).

Notice 30.4

See s 33ZC(7).

No Opt Out 30.5

See s 33ZC(8).

Group Definition 30.6

See s 33ZC(9).

Section 33 — Appeals to High Court 30.7 The operation of s 33ZD is summarised by Greenwood J in Skyring v Commissioner of Taxation (2007) 244 ALR 505; [2007] FCA 1526 at [34]: The jurisdiction of the High Court to hear and determine appeals from judgments of the Federal Court is conferred by s 33 of the Act. Except as otherwise provided by another Act of the parliament, an appeal shall not be brought from a judgment of the Full Court of the

court unless the High Court gives special leave to appeal: see also s 73 of the Constitution and s 35A of the Judiciary Act 1903 (Cth). An appeal does not lie to the High Court from a judgment of the court constituted by a single judge unless a single judge is exercising the appellate jurisdiction of the court in relation to an appeal from a judgment of the Federal Magistrates Court, and then only with special leave of the High Court.

[page 457]

CHAPTER 31 Suspension of Limitation Periods: s 33ZE • OVERVIEW • Section 33ZE provides for the suspension of the running of ‘any limitation period’ that applies to the claims of group members ‘upon the commencement of a representative proceeding’. The suspension applies until a group member opts out of the proceeding or there is a final determination made in relation to the proceedings (including appeals) which does not finally dispose of the group member’s claim.

• LEGISLATION • Section 33ZE, Federal Court of Australia Act 1976 (Cth) Suspension of limitation periods (1) Upon the commencement of a representative proceeding, the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended. (2) The limitation period does not begin to run again unless either the member opts out of the proceeding under section 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim.

Section 33ZE, Supreme Court Act 1986 (Vic)

Suspension of limitation periods (1) Upon the commencement of a group proceeding, the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended. (2) The limitation period does not begin to run again unless either the member opts out of the proceeding under section 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim.

[page 458]

Section 182, Civil Procedure Act 2005 (NSW) Suspension of limitation periods (1) On the commencement of any representative proceedings, the running of the limitation period that applies to the claim of a group member to which the proceedings relate is suspended. (2) The limitation period does not begin to run again unless either the member opts out of the proceedings under section 162 or the proceedings, and any appeals arising from the proceedings, are determined without finally disposing of the group member’s claim. (3) However, nothing in this section affects the running of a limitation period in respect of a group member who, immediately before the commencement of the representative proceedings, was barred by the expiration of that period from commencing proceedings in the member’s own right in respect of a claim in the representative proceedings. (4) This section applies despite anything in the Limitation Act 1969 or any other law.

Section 103Z, Civil Proceedings Act 2011 (Qld) Suspension of limitation periods (1) On the starting of a representative proceeding, the running of any limitation period applying to the claim of a group member to which the proceeding relates is suspended. (2) The limitation period does not start running again unless— (a) the member opts out of the representative proceeding under section 103G; or (b) the representative proceeding, and any appeal from the proceeding, is decided without finally disposing of the member’s claim. (3) This section applies despite anything in the Limitation of Actions Act 1974 or any other law or rule of law.

• COMMENTARY • 31.1 Consideration of s 33ZE, and the consequences that commencement of a representative proceeding has on the limitation period of a group member’s claim, has largely arisen during the interlocutory stages of representative proceedings (for example, during pleading disputes). The provision provides that limitation periods applicable to group members’ claims are suspended unless the group member opts out of the proceedings under s 33J or the proceeding, and any [page 459] appeals arising out of it, ‘are determined without finally disposing’ of the group member’s claim: see McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1 at 4–5; 156 ALR 257 at 260 per Wilcox J.

Purpose of Provision 31.2 Section 33ZE evinces the legislature’s concern that an individual group member’s claim should not be prejudiced by the proceedings having been commenced as a representative proceeding: Bright v Femcare Ltd [2002] FCA 11 at [8] per Stone J. The section recognises that the time within which a group member has a cause of action against a respondent will be affected by the commencement of representative proceedings on behalf of that group member. While not technically a party to a representative proceeding, the group member’s claim is in suit until the group member either opts out of the proceeding or there is a final determination of the proceeding (see s 33ZB (Chapter 28) regarding final determination of a group member’s claim). The Explanatory Memorandum to the Federal Court of Australia Amendment Bill 1991 (Cth) states in relation to suspension of limitation periods (at [49]): This section provides for the suspension of the limitation period that applies to the claim of a group member on the commencement of a representative proceeding. This suspension is lifted if the member opts out or the proceeding, and any appeals arising from the proceedings, are determined without finally disposing of the group member’s claims. The provision is designed to remove any need to commence an individual proceeding to protect himself or herself from expiry of the relevant limitation period in the event that the representative action is dismissed on a procedural basis without judgment being given on the merits.

The Australian Law Reform Commission (ALRC) in its ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) envisaged that, pursuant to the recommended approach to representative proceedings in the Report, any ‘proceedings [brought by the lead applicant(s) and group members] would be commenced together and on the same date’ and as such, no provision was included in the draft bill attached to that report: at [96]. The Report’s approach was not adopted and consequently a need to address limitation periods for group members arose.

Limitation Periods Suspended by s 33ZE 31.3

Section 33ZE tolls the running of ‘any limitation period’ that applies

to the claim of a group member to which the proceeding relates. The language of ‘any limitation period’ is very broad but it is constrained by the words following it, namely ‘claims to which the proceeding relates’. It seems likely that there needs to be some nexus between the claim in the representative proceeding and [page 460] the limitation period which is suspended. For example, if the proceeding raises a claim under one federal statute but not another, it is only the limitation period that applies to the statute in issue and not any other. In Darcy v Medtel Pty Ltd (No 3) [2004] FCA 807, the applicant sought to amend the pleadings to include a new claim for relief, which he said arose out of the ‘same facts or substantially the same facts as those already pleaded to support existing claims for relief’: at [4]. The respondents opposed the amendment on the basis that it might deprive them of the opportunity to plead a limitations defence: at [1]. Sackville J assumed (without deciding the point) for the purpose of the amendment application, ‘that section 33ZE of the Federal Court Act does not suspend the running of any limitation period that otherwise would not apply to the claims made in the proposed amendments’: at [24]. In Hassid v Queensland Bulk Water Supply Authority t/as Seqwater [2017] NSWSC 599, the plaintiffs had a concern that Civil Procedure Act 2005 (NSW) s 182 may not operate to suspend a limitation period which operated by force of Queensland legislation. Beech-Jones J observed (at [13]): In late 2016 a proceeding was commenced which named as plaintiffs all the individual members of the Rodriguez group other than Rodriguez itself and named the same defendants as the Rodriguez proceeding (the ‘Lynch proceeding’). The substantive allegations against the three defendants in the Lynch proceeding are identical to the Rodriguez proceeding. These proceedings were commenced out of a concern that s 182 of the CPA might not have the effect of suspending the ‘running’ of the relevant limitation period in the Limitation of Actions Act 1974 (Qld) in any application it has to group members’ claims. At present, the Lynch proceeding has been stayed but orders have been made that have the effect that the parties to that proceeding are bound by the answers to common questions given in the Rodriguez proceedings.

The issue of the enforceability of the limitation period suspension in different jurisdictions has not been determined at this stage.

Expired Limitation Periods not Re-enlivened 31.4 In New South Wales, Civil Procedure Act 2005 (NSW) s 182(3) is an additional subsection compared to the analogous provisions in the federal, Victorian and Queensland regimes. It states that nothing in the subsection affects the running of a limitation period where a group member was barred from commencing proceedings immediately before the commencement of the representative proceeding. In other words, the commencement of representative proceedings does not re-enliven a previously time-barred claim. 31.5 The same position has been confirmed in the Federal Court in Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14 at [61]. [page 461]

‘Determination’ of a Group Member’s Claim 31.6 Section 33ZE provides that a limitation period applying to a group member’s claim will be suspended unless the group member opts out under s 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim. The Explanatory Memorandum to the Federal Court of Australia Amendment Bill 1991 (Cth) at [49] provided: The provision is designed to remove any need to commence an individual proceeding to protect himself or herself from expiry of the relevant limitation period in the event that the representative action is dismissed on a procedural basis without judgment being given on the merits.

This would appear to suggest that a limitation period will not start to run again unless one of the two scenarios in s 33ZE(2) arises, namely the group member opts out or the proceeding is determined on the merits. For example,

in Lam v Rolls Royce PLC (No 5) [2016] NSWSC 1332, the court observed in relation to the equivalent New South Wales provision (at [13]): Subsection 182(2) appears to contemplate the Court finally determining a group member’s claim and that must extend to either upholding it or dismissing it in such a way as to finally determine it.

31.7 However, other cases which have considered s 33ZE make it clear that the provision does not operate in such a limited way. 31.8 The Federal Court has considered whether a group member’s claim is determined, and the limitation period suspension lifted, in circumstances where a self-executing or guillotine order is made dismissing a representative proceeding (see Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 at [17] per Kenny J) or one month after publication of a notice that the proceeding has been settled: see Williams v FAI Home Security Pty Ltd (No 5) [2001] FCA 399 at [20] per Goldberg J. In both cases, the limitation period suspension was lifted after the relevant event. A group member’s claim will also be determined where an order is made declassing a representative proceeding pursuant to s 33N. 31.9 In relation to discontinuance of a representative proceeding pursuant to s 33N (see Chapter 15), Stone J stated in Bright v Femcare at [6]–[8]: Read literally s 33ZE would seem to cover the present situation. An order [pursuant to s 33N] that the proceeding not continue as a representative proceeding, or an appeal upholding such an order, does not determine the proceeding; Silkfield Pty Ltd v Wong [1998] FCA 1645. Therefore the circumstances in which the section provides for the limitation period to begin to run again would not seem to arise as a result of an order under s 33N. Such an order, does however, effectively exclude a group member

[page 462] from the proceeding and from any direct participating in the outcome of the proceeding. Moreover, it would seem contrary to the apparent policy of the section that the suspension of the limitation period should continue when the relevant group member can no longer participate in the proceeding. It may be that the correct interpretation of the section is that an order under s 33N is sufficient to determine the proceeding in so far as it relates to a group member’s claim and

that therefore such an order has the finality necessary to revive the running of a limitation period. Nevertheless, even if this analysis is correct, it is difficult to see why the extension of s 33ZE’s protection to the determination of any appeal would not protect the group members until that point in time … … S 33ZE evinces the legislature’s concern that an individual group member’s claim should not be prejudiced by the proceedings having been brought as a representative proceeding. If there is any real possibility of such prejudice then it is appropriate that a stay be granted.

Similarly, Jacobson J stated in Tongue v Tamworth City Council (2004) 141 FCR 233; [2004] FCA 1702 at [54]: I will make orders which will give Reganam [the applicant] the opportunity to seek to be substituted unconditionally or to give other group members an opportunity to apply to be substituted. If neither of those events occur within a reasonable time, there will be no applicant in the proceeding and I will, at the next directions hearing, consider whether it is appropriate to make an order under s 33N that the proceeding no longer continue under Pt IVA and an order under s 33P for group members to be joined as applicants in their own separate proceedings. At that point of time, the limitation period would begin to run afresh; see s 33ZE(2).

See also Tian v Minister for Immigration, Local Government and Ethnic Affairs (1994) 33 ALD 451.

Amendments to the Group 31.10 The effect that amending a group definition has on the operation of s 33ZE was considered by Jacobson J in Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd [2011] FCA 106. In that case, the applicants were seeking leave of the court to effectively ‘open up’ a ‘closed class’. As the amendment to the group definition was to open up what was previously a closed class (rather than adding further group members to the closed class), the policy considerations that arose in Multiplex Funds Management Ltd v Dawson Nominees Pty Ltd (2007) 164 FCR 275; 244 ALR 600; [2007] FCAFC 200 and Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; 67 IPR 124; [2005] FCA 1483 were not considered: see s 33H (Chapter 9). One of the criteria for group membership in the Brisbane Broncos class action was that the group member had entered [page 463]

into a retainer agreement with Slater & Gordon at the commencement of the proceedings. The applicants were applying to the court to delete this requirement from the group definition. Jacobson J granted the applicants leave to amend the application, stating (at [92]–[96]): The effect of doing this is to ‘open the class’ of Group Members with the possibility that the group may include new members who entered into rental agreements with Alleasing more than six years ago. This seems to me to provide a sufficient basis to ‘otherwise order’ in relation to the date at which the amendment of the group definition will take effect: O 13 r 3A(1) of the Federal Court Rules. In my view, the amendment should take effect from the date of the orders rather than from the date of the proceeding. In coming to this view, I adopt the approach taken by Brereton J in Street and 7 Others v Luna Park Sydney Pty Limited [2006] NSWSC 230. In that case, his Honour held at [47] that the usual rule that an amendment relates back to the date of filing of the original document does not apply to an amendment which adds a party. This is because where a party is added to a proceeding, the proceeding against it is only commenced at the date of joinder and the relation-back doctrine does not apply so as to deprive a party joined after the expiry of the limitation period from raising a limitation defence. See also the observations of Brereton J at [51]–[52]. I accept Mr Jackman’s submission that the position stated by Brereton J as applicable in nonrepresentative proceedings ought also apply to an amendment in a proceeding under Part IVA because the effect of the amendment is to add new Group Members on whose behalf the proceeding is brought. This may potentially include persons whose claims are statute-barred, even though such claims may not have been barred when the proceeding was commenced. [Emphasis added]

31.11 Federal Court Rules 1979 (Cth) O 13 r 3A(1) can now be found in r 15.16 (cross claim adding a party) and r 16.54 (pleadings amended by right or with consent of parties) of the Federal Court Rules 2011 (Cth). 31.12 Where the amendment to the group definition involves the addition of new group members, the general rule that an amendment which results in the addition of a new party takes effect from the date of the amendment is likely to apply, even though group members are not strictly a ‘party’ to the proceedings: see Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd; Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [33]. 31.13

In Blairgowrie Trading Ltd v Allco Finance Group Ltd (2015) 325

ALR 539, the applicants foreshadowed a potential amendment to the group definition if the court was unwilling to make a common fund order. The applicants argued that this could cause difficulty for group members who would be shut out of the case because their limitation period suspension conferred by s 33ZE would cease and [page 464] there was only a limited period of time to commence fresh proceedings. The court was unpersuaded by the argument (at [176]): … the Applicants cannot in any event close the class without the leave of the Court under s 33K(1). If, as the Applicants appear to submit, the closing of the class would effectively shut group members out of the proceeding to their potential detriment, they may have difficulty in securing leave …

31.14 However, in McMullin v ICI Australia Operations Pty Ltd (No 6), an application was made to ‘close the class’ of group members in the representative proceedings. Wilcox J found that it was appropriate to make an order ‘closing the class’ in the circumstances as without one the proceedings could never be regarded as finalised. Wilcox J stated (at FCR 4– 5; ALR 260) that there was force in the argument made by the respondents that if no closing date was provided, ‘the proceeding is without end’ and the respondents ‘can never know whether they have resolved all claims’ which is contrary to ‘the normal situation where the respondent can resolve the claims of the actual applicants and end that litigation and, when the limitation period has expired, be satisfied no more like claims can be pursued any further’. His Honour observed (at FCR 4–5; ALR 260): The claims would never become statute-barred. Section 33ZE(1) of the Act provides that, upon the commencement of a representative proceeding, ‘the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended’. Section 33ZE(2) says the limitation period ‘does not being to run again’ unless either the member opts out of the proceeding under s 33J or the proceeding, and any appeals arising out of it, ‘are determined without finally disposing of the group member’s claim’. At first sight, the second alternative might seem to apply. But it does not. Where damages are being individually assessed, as there, the proceeding would not be ‘determined’ until all individual claims were assessed. I think it would be unfair to the respondents to allow a situation where they could never regard the proceeding as finalised.

• CASE LAW • 31.15

Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14; BC201700262 (Griffiths J)

The applicants were seaweed farmers in Indonesia bringing representative proceedings against PTTEP for loss suffered by reason of the effect of an oil spill on the Montara Oil Field in 2009. Griffiths J determined the separate question of whether the commencement of the present proceeding under Federal Court of Australia Act 1976 (Cth) Pt IVA on behalf of group members constitutes the institution of an action by group members for the purposes of Limitation Act 1981 (NT) s 44. [page 465] Limitation Act s 44(3) conditions the circumstances in which an extension of the limitation period may be granted by relevantly restricting the exercise of such power to circumstances where the court is satisfied that facts material to the ‘plaintiff’s’ case were not ascertained by him or her until sometime after the expiration of the limitation period and that the action was instituted within 12 months after the ‘plaintiff’ ascertained those facts. The court held that the power of the court to extend time under Limitation Act s 44 applied not only to the applicant but also to each of the group members (as defined) who is able to satisfy the requirements of that provision. As part of their submission the respondents argued that the structure of Pt IVA representative proceedings made it plain that group members were not the persons bringing an action. Because the commencement of a representative proceeding did not constitute the bringing of an action by group members, time did not stop running by reason of Limitation Act s 12(1)(b) in respect of those group members. It was submitted that this issue was addressed by Federal Court Act s 33ZE which, it was contended,

presupposes that the commencement of a representative proceeding did not constitute the bringing of an action by each group member such that limitation periods cease to run. The court noted (at [46]): Acceptance of this submission would mean that the applicant in a representative proceeding can apply for an extension of time under s 44 in respect of his or her own claim, but not on behalf of the group members. Nor could the group members themselves apply for an extension of time because they are not plaintiffs. Furthermore, if the applicant in such a proceeding is granted an extension, s 12(1)(b) will not bar his or her claim, but it will continue to bar the claims of group members. Section 33ZE of the FCA Act would apply to claims which are brought within time, but s 33ZE has no application with respect to limitation periods which have already expired.

The court rejected the respondent’s construction (at [61]): Contrary to the respondent’s position, s 33ZE does not operate to avoid the anomalous consequences produced by the respondent’s preferred construction. This provision only applies to Pt IVA proceedings which are commenced within time and it has no application where the relevant limitation period had already expired when the proceeding was commenced, as is the case here.

31.16

Blairgowrie Trading Ltd v Allco Finance Group Ltd (2015) 325 ALR 539; [2015] FCA 811 (Wigney J)

The applicants commenced representative proceedings against Allco Finance Group Ltd in relation to disclosures and non-disclosures of information in relation to AFG’s position during the financial crisis in 2007 and 2008. The applicants [page 466] sought an order that the court approve the funding agreements entered into with a litigation funder and that it applied to all group members. The court held that the order should not be made. In its submission, the applicants said that if the order was not made, then

they would apply to amend the group definition to restrict it to those who had signed a funding agreement. The applicants argued that this could cause difficulty for group members who would be shut out of the case because their limitation period suspension conferred by s 33ZE would cease and there was only a limited period of time to commence fresh proceedings. The court was unpersuaded by the argument (at [176]): … the Applicants cannot in any event close the class without the leave of the Court under s 33K(1). If, as the Applicants appear to submit, the closing of the class would effectively shut group members out of the proceeding to their potential detriment, they may have difficulty in securing leave …

Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 (Perram J)

31.17

This case concerned an application to amend the group definition in a representative proceeding arising out of the destruction of Malaysian Airlines Flight MH17 over Ukraine on 17 July 2014. As the group definition was contained in a statement of claim rather than an originating application, the power in s 33K to amend a group definition was not enlivened. The power to amend the group definition in a statement of claim is found in Federal Court Rules 2011 (Cth) r 16.53. Rule 16.53 provides: 16.53 Application for leave to amend Unless rule 16.51 applies, a party must apply for the leave of the Court to amend a pleading.

However, the general power to amend a pleading operates in parallel to r 8.21, which deals with the amendment power relating to originating applications, which provides: 8.21 Amendment generally (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: … (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises:

[page 467] (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding. … (2) An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started. … [Emphasis added]

Accordingly, in order to enliven the power to amend within r 16.53 to amend a group definition amendment, an application will need to bring themselves within r 8.21(g): Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [29]. The court found that the general power of amendment had been enlivened. However, both s 33K and r 16.53 are silent about when an amendment made under them is to take effect. Perram J observed (at [18]– [19): It has long been accepted, however, that the usual position is that an amendment to a pleading or originating process takes effect from the commencement of the proceeding: Baldry at 419. On the other hand, that principle does not apply where the effect of an amendment is to add a party: Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230 at [46]– [47] per Brereton J; Ketteman v Hansel Properties Ltd [1987] AC 189 at 200 per Lord Keith of Kinkel. Indeed, this latter principle is express in FCR 9.05(3) (although it refers to the date of the joinder order rather than the original filing date). Because the amendment of a class definition in a pleading does not involve the joinder of a party, it seems that it would be the former principle which would be applied rather than the latter. If the former principle were applied, so that the amendments took effect from the commencement of the proceeding (here 1 July 2016), this would appear to make relevant the so-called rule in Weldon v Neal (1887) 19 QBD 394. If the former principle were applied, so that the amendments took effect from the commencement of the proceeding (here 1 July 2016), this would appear to make relevant the so-called rule in Weldon v Neal (1887) 19 QBD 394. In that case, the plaintiff had sued in slander but after the expiry of the relevant limitation period had sought to amend her claim so as to add other claims including assault. The Court of Appeal held that the appeal should not be permitted. Lord Esher MR said at 395:

We must act on the settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments.

[page 468] If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment, would be barred by the Statute of Limitations, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be, in my opinion, improper and unjust. Under very peculiar circumstances the Court might perhaps have power to allow such an amendment, but certainly as a general rule it will not do so. This case comes within that rule of practice, and there are no peculiar circumstances of any sort to constitute it an exception to such rule. For these reasons I think the order of the Divisional Court was right and should be affirmed. [Emphasis added]

Perram J noted that the rule in Weldon v Neal has been widely ameliorated by statutory and rule changes. In the Federal Court, the effect of the former rules governing pleading amendments was to permit an amendment which was statute-barred if it arose out of the same or substantially the same facts, to make an amendment date from the commencement of the proceedings and to confer an unfettered discretion on the court to choose some other effective date if it thought it expedient to do so: at [27]. While the old rules were replaced in 2011, the power to amend a pleading (and the time that the amendment takes effect) operates in the same way as the former rules: at [28]. This means that where an amendment is permitted, the power is discretionary and is accompanied by a power to order that the amendment in question takes effect from some day other than the filing of the original proceedings: Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [32]. Where the amendment to the group definition involves the addition of new group members, the general rule that an amendment which results in

the addition of new party takes effect from the date of the amendment is likely to apply, even though group members are not strictly a ‘party’ to the proceedings: see Brisbane Broncos Leagues Club v Alleasing Finance Australia Pty Ltd [2011] FCA 106; Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 at [33].

31.18

Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 (Merkel J)

The application before the court in Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 was an application for leave to amend the application and statement of claim to confine the claims being pursued to limit a category of group members. The issue considered was whether the amendment constituted a discontinuance of the representative proceedings for the purposes of Federal Court Act s 33V and whether leave of the court was required under s 33K for the alteration of [page 469] the description of group members. Merkel J considered s 33ZE in the following way (at [37]): Insofar as any limitation period is concerned section 33ZE suspends the period that applies to the claims of group members upon the commencement of the proceeding and the period will not begin to run until there has been a discontinuance: see s 33ZE(2).

31.19

Bright v Femcare Ltd [2002] FCA 11 (Stone J)

In 2001, pursuant to Federal Court Act s 33N and to notices of motion filed by the respondents, Stone J ordered that the proceeding no longer continue as a representative proceeding. The applicant sought leave to appeal the judgment and subsequently sought a stay of the order declassing the proceeding pending the outcome of the appeal. Stone J held (at [4]–[8]):

In support of the application for a stay, counsel for the applicant, Mr Bannon SC, relied on the effect of the order that the proceeding no longer continue as a representative period in relation to limitation periods relevant to individual group members. S 33ZE(1) of the Act provides that when a representative proceeding is commenced the running of any limitation period that applies to the claim of a group member is suspended. Subs (2) of s 33ZE provides that: the limitation period does not begin to run again unless either the member opts out of the proceeding under s 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim. Read literally s 33ZE would seem to cover the present situation. An order that the proceeding not continue as a representative proceeding, or an appeal upholding such an order, does not determine the proceeding; Silkfield Pty Ltd v Wong [1998] FCA 1645. Therefore the circumstances in which the section provides for the limitation period to begin to run again would not seem to arise as a result of an order under s 33N. Such an order does, however, effectively exclude a group member from the proceeding and from any direct participation in the outcome of the proceeding. Moreover, it would seem to be contrary to the apparent policy of the section that the suspension of the limitation period should continue when the relevant group member can no longer participate in the proceeding. It may be that the correct interpretation of the section is that an order under s 33N is sufficient to determine the proceeding in so far as it relates to a group member’s claim and that therefore such an order has the finality necessary to revive the running of a limitation period. Nevertheless, even if this analysis is correct, it is difficult to see why the extension of s 33ZE’s protection to the determination of any appeal would not protect the group members until that point in time. However, given that the respondents did not contest this

[page 470] issue I am prepared to give the applicant the benefit of the doubt and assume, for present purposes, that there is a real possibility that an order under s 33N would cause individual limitation periods to run again. The question then is whether it is appropriate to protect group members from the necessity of commencing individual proceedings pending the outcome of the appeal process. The order made under s 33N is, in essence, an order about case management made in the exercise of the discretion of the Court and concerns the most efficient, economical and fair way to deal with a multiplicity of claims. It has the limited effect of preventing group members’ claims being dealt with under Pt IVA of the Act. It is not, in my opinion, intended to prejudice the entitlement of a group member to pursue his or her claim individually. S 33ZE evinces the legislature’s concern that an individual group member’s claim should not be prejudiced by the proceedings having been brought as a representative proceeding. If there is any real possibility of such prejudice then it is appropriate that a stay be granted. [Emphasis added]

31.20

King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 1560 (Moore J)

Moore J considered an application made by the respondent seeking orders which permitted it to communicate with group members. In considering whether to grant the orders (and also what form the communication should take), his Honour made the follow statement about s 33ZE (at [9]–[10]): The whole scheme of Pt VIA of the Act is that, ordinarily, there is one proceeding, at least until common issues are resolved, and that the members of the group are not parties to that proceeding. The representative party or parties prosecute the proceeding on behalf of the group. As I discussed in my judgment of 11 July 2002 at [37]–[38] and Sackville J later discussed in Courtney v Medtel Pty Ltd [2002] FCA 957 at [33]–[36], the legislature adopted, in the face of an Australian Law Reform Commission recommendation to different effect, a scheme in which there is not a discrete proceeding maintained on behalf of each member of the group at least until common issues are resolved (assuming the matter continues as a representative proceeding until then). That is, there is not a discrete proceeding in relation to any particular ‘individual claim’. Nonetheless, it is comparatively clear the scheme contemplates that ‘individual claims’ are not entirely subsumed by the representative proceeding as illustrated by s 33ZE which provides that the running of a limitation period affecting the ‘claim’ of a group member is suspended while, in effect, the representative proceeding remains unresolved (or the individual opts out). What then might be comprehended by an order that a ‘claim’ of a group member be stayed? As Lindgren J noted in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 523: … whatever the word ‘claims’ in the provision (s 33(1)(c)) denotes, they have an existence independent of, and antecedent

[page 471] to, the commencement of the proceeding, since it is only if seven or more persons have claims against the same person that the proceeding under Pt VIA may be commenced … The word ‘claim’ has been described as ‘encompass(ing) everything that might lawfully be brought before the Court for a remedy’: see Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179 at 187 and the discussion in an earlier judgment in this matter at (2000) 100 FCR 209 at 221–223. While it is a word of wide meaning and is not

limited to a cause of action, it nonetheless possible to view it as an aggregation of potential rights that might be vindicated in a proceeding brought under Pt VIA.

[page 473]

CHAPTER 32 General Power of Court to Make Orders: s 33ZF • OVERVIEW • As a general power of the court to make orders, s 33ZF is intended to confer the widest possible power on the court to do whatever is appropriate or necessary to ensure the interests of justice are achieved in a representative proceeding.

• LEGISLATION • Section 33ZF, Federal Court of Australia Act 1976 (Cth) General Power of Court to make orders (1) In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding. (2) Subsection (1) does not limit the operation of section 22.

Section 33ZF, Supreme Court Act 1986 (Vic) General power of court to make orders In any proceeding (including an appeal) conducted under this Part the

Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

Section 183, Civil Procedure Act 2005 (NSW) General Power of Court to make orders In any proceedings (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order that the Court thinks appropriate or necessary to ensure that justice is done in the proceedings.

[page 474]

Section 103ZA, Civil Proceedings Act 2011 (Qld) General Power of Court to make orders In any proceedings (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order that the Court thinks appropriate or necessary to ensure that justice is done in the proceedings.

• COMMENTARY • Purpose of the Provision 32.1 It is impossible to foresee all the issues that might arise in the conduct of representative proceedings. In order to avoid the need for frequent resort to parliament for amendments to the legislation, it was desirable for parliament to empower the court to make orders necessary to

resolve unforeseen difficulties — the only limitation being that the court must think the order appropriate or necessary to ensure that justice is done in the proceeding: McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1 at 4; 156 ALR 257 at 260 per Wilcox J.

Invoking the Provision 32.2 Section 33ZF confers wide power on the court in a representative proceeding: McMullin v ICI Australia Operations Pty Ltd (No 6) at 3–4; 258– 60. The provision can be invoked by any party to the proceedings or any group member. The court can also invoke the provision of its own motion. However, the Victorian provision differs from the other jurisdictions in not extending standing to invoke the provision to group members: Clarke v Great Southern Finance Pty Ltd (in liq) [2014] VSC 569 at [22]; Camping Warehouse v Downer EDI (Approval of Settlement) [2016] VSC 784 at [43]. The court may ‘make any order the Court thinks appropriate or necessary to ensure that justice is done’ in a proceeding.

‘Any order’ 32.3 In Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; 194 ALR 337; [2002] HCA 54, Kirby J stated that it is clear parliament intended to arm the Federal Court with a wide and flexible armoury of powers, capable of being adapted to the particular needs and novel circumstances of representative proceedings. Representative proceedings are not traditional litigation, nor should they be subjected to all of the requirements of such litigation: see [267]. [page 475] In Johnstone v HIH Ltd [2004] FCA 190, Tamberlin J stated that the power conferred on the court by s 33ZF is not limited to the actual determination of the matter in question in the proceedings, but extends to encompass all

procedures necessary to bring the matter to a fair hearing on a just basis: at [104].

A Broad Power 32.4 The breadth of the power afforded by s 33ZF has been recognised by the court on numerous occasions. See, for example, Sackville J in Courtney v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 at [48]: There are good reasons to give s 33ZF a generous interpretation. The section is couched in broad terms. Moreover, the Court is given power to act on its own motion. The language, which is described in the Explanatory Memorandum, as ‘wide’, doubtless reflects the drafter’s perception that the new statutory procedure for representative proceedings was likely to throw up novel problems that would require close supervision by the Court.

However, his Honour cautioned that s 33ZF should not become a vehicle for rewriting the rest of Pt IVA: at [47]–[54]. 32.5 In McMullin v ICI Australia Operations Pty Ltd (No 6) at FCR 4; ALR 260, Wilcox J observed that the power in s 33ZF was ‘intended to confer on the Court the widest possible power to do whatever is appropriate or necessary in the interests of justice being achieved in a representative proceeding’. His Honour expressed the view that Pt IVA introduced a novel procedure and at the time it was impossible to foresee all the issues that might arise in the operation of the Part. For that reason, it was desirable to empower the court to make orders necessary to resolve unforeseen difficulties; however, the order must be appropriate or necessary to ensure that justice is done in the proceeding. 32.6

In Wotton v Queensland [2009] FCA 758 at [41], Rares J added that:

This provision, like all provisions conferring jurisdiction or granting powers to a court, should not be construed narrowly by making implications or imposing limitations which are not found in its express words: Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ.

32.7 However, although a plenary power, it is not unlimited and any order must be in keeping with the requirements in the text: Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; 324 ALR 316; Johnston v

Endeavour Energy [2015] NSWSC 1117 at [92]; Camping Warehouse v Downer EDI at [45]; Re Banksia Securities Ltd (rec & mgr apptd) [2017] VSC 148 at [108]. [page 476]

Statutory Construction 32.8 A detailed textual analysis of s 33ZF was undertaken in each of Earglow Pty Ltd v Newcrest Mining Ltd, Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539 and Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; 338 ALR 188; [2016] FCAFC 148. In Earglow Pty Ltd v Newcrest Mining Ltd, Beach J gave a thorough, but restrictive, textual analysis of the provision as follows (at [33]–[34], [37]): … although in a general sense s 33ZF(1) has been described as a plenary power, nevertheless it is not unlimited. It is in one sense both trite and question begging to assert that the power must be exercised judicially. But let me pass to the language of s 33ZF(1) itself. It uses the language ‘make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding’. Grammatically, ‘thinks’ is to be applied distributively, so that it reads ‘thinks appropriate’ or ‘thinks necessary’; there is no ‘is’ before ‘necessary’. But as applied distributively, ‘thinks appropriate’ has a lower threshold than ‘thinks necessary’. But in the composite phrase, the concept is ‘thinks appropriate … to ensure that justice is done in the proceeding’ [emphasis in original]. In other words, although the words ‘thinks appropriate’ have a lower threshold than ‘thinks necessary’, nevertheless the relevant element of necessity in another guise is enshrined in the coupling of the words ‘to ensure that’. In summary, the question becomes whether I think it is appropriate, to ensure that justice is done in the proceeding, to make the orders sought by Newcrest. It is not whether I think it to be merely convenient or useful per se. Section 33ZF(1) is not a licence for me to impose my own expansive case management philosophy. Rather, I must be satisfied that any order that is made satisfies the statutory test. Now I accept that s 33ZF(1) is a very wide power and ought not to be construed narrowly (McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1 at 4 and Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Co Inc (1994) 181 CLR 404 at 421). Nevertheless, any exercise of power has to fit within the statutory formulation. Much of Newcrest’s argument has described the effect of the orders sought as ‘contributing’ to an efficient resolution, being ‘of assistance’ to such a resolution, being ‘helpful’ or ‘facilitating’ such a resolution. Now these are all laudable objectives, but that is not the language of s 33ZF(1).

… even if the statutory test in s 33ZF(1) is satisfied, that merely empowers the Court to make the relevant order sought. But the Court still has a discretion to refuse the order. But perhaps such distinctions are more of theoretical difference than practical significance. If the order would satisfy the condition stipulated, it may be difficult to see why any residual discretion to refuse would then be exercised.

In Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq), Wigney J cited McMullin v ICI; Courtney v Medtel; and Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Co. His Honour then referred to the respondents’ [page 477] argument that the orders were beyond power and observed that (at [99]– [101], [104], [112]–[114]): It is difficult to conceive of an order that the court would be likely to think appropriate or necessary to ensure that justice is done in the proceeding, but which would nevertheless be beyond power. The suggestion that the court would be powerless to make an order, despite having found that it was appropriate or necessary to make the order to avoid unfairness to a party or group members, or to prevent some other injustice in the proceeding, is difficult to accept. … the respondents submit that the proposed order is inconsistent with the statutory scheme, or otherwise cuts across the operation of specific provisions in Pt IVA of the FCA Act. If that is so, that would be a good reason to find that the order is neither appropriate nor necessary. Section 33ZF should not become a vehicle for rewriting the legislation: Courtney [v Medtel] at [52]. If the order is not found to be appropriate or necessary to ensure that justice is done in the proceeding, the court does not have power to make the order. But that is not because of some implied limitation in the operation of the section. It is because the express requirement in the section has not been met. … It should also be noted, in this context, that the power to make an order under s 33ZF is discretionary. Even if the express requirement that the order be appropriate or necessary to ensure that justice is done in the proceedings is satisfied, the court retains a residual discretion whether or not to make the order. … The requirement in s 33ZF that the order be ‘appropriate or necessary’ would ordinarily require, as a first step, the identification of a particular issue or problem in the proceeding that needs to be addressed. There would ordinarily have to be some specific reason or justification for making an order under s 33ZF. An order is unlikely to be either appropriate

or necessary unless it is directed at resolving some issue or problem that has arisen or would, but for the order, arise. The particular issue or reason for making the order under s 33ZF must also be one that has arisen in, or relates to, ‘the proceeding’. The section is not concerned with theoretical issues, or difficulties that may exist beyond the metes and bounds of the particular proceeding. … The criterion ‘justice is done’ also suggests that the particular issue or problem must somehow relate to the just hearing and determination of the claims, or the enforcement of the rights or subject matter in issue in the proceeding. That may involve a question of procedure, or it might involve a question involving the substantive rights and interests of the parties. A requirement that justice is done also suggests that the proposed order must be fair and equitable. That will ordinarily involve a consideration of the position of all parties: McMullin [v ICI] at FCR 4E–F; ALR 260.

[page 478] In Money Max Int Pty Ltd v QBE Insurance Group Ltd, the Full Court of the Federal Court commenced its analysis of s 33ZF by stating it largely agreed with Beach J’s observations in Newcrest that while s 33ZF is a wide power, it must nonetheless satisfy the requisite statutory test, namely that the exercise of power is ‘appropriate or necessary, to ensure, that justice is done in the proceedings’. The statutory test under s 33ZF will not be satisfied solely on the basis that the orders sought were merely convenient or useful: at [161]. The Full Court then turned to the wording of s 33ZF (at [162]): However, the word ‘necessary’ and similarly the phrase ‘to ensure’ depend upon and must be construed in their context. In Thomas v Mowbray (2007) 233 CLR 307; [2007] HCA 33 at [101] Gummow and Crennan JJ approved a passage from McCulloch v Maryland 17 US 316 (1819) at 413–414 where the Supreme Court of the United States said of the term ‘necessary’: Does it always import an absolute physical necessity, so strong, that one thing to which another may be termed necessary, cannot exist without that other? We think it does not. If reference be had to its use, in the common affairs of the world, or in approved authors, we find that it frequently imports no more than that one thing is convenient, or useful, or essential to another. To employ the means necessary to an end, is generally understood as employing any means calculated to produce the end, and not as being confined to those single means, without which the end would be entirely unattainable. … [The word ‘necessary’] has not a fixed character, peculiar to itself. It admits of all degrees of comparison; and is often connected with other words, which increase or diminish the impression the mind receives of the urgency it imports.

The Full Court considered further case law on the interpretation of the word ‘necessary’, Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52 at [8] per Bathurst CJ and [45] per Basten JA, and then concluded (at [165]–[166]): In our view, in context, there is less of a difference between ‘appropriate to ensure justice’ and ‘necessary to ensure justice’ than might initially appear. In s 33ZF ‘necessary’ identifies a connection between the proposed order and an identified purpose as to which the Court must be satisfied before making an order. The expression ‘necessary to ensure that justice is done’ has shades of meaning and admits of degrees of comparisons and in context the expression should not be given a narrow construction. The requirement that a proposed order be ‘necessary to ensure that justice is done in the proceeding’ does not require that the Court be satisfied that unless the order is made the administration of justice will collapse or that justice in the proceeding will not be ‘ensured’ in the sense of being certain. Section 33ZF provides a wide power directed at enabling the Court to make orders to deal with the novel problems that might arise through a new statutory procedure for representative

[page 479] proceedings, and the expression ‘necessary to ensure that justice is done’ requires that the proposed order be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding. Even so, we do not have to trouble ourselves further on the ambit of the word ‘necessary’ as the applicant does not suggest that the orders are presently ‘necessary’. Rather, it contends that the orders are ‘appropriate … to ensure that justice is done’.

32.9 The Full Court, despite ‘largely’ agreeing with Beach J’s statement in Newcrest, set the bar for employing s 33ZF at a lower level than Beach J did by requiring that the orders be ‘reasonably adapted to the purpose of seeking or obtaining justice in the proceeding’. Reasonably adapted is specifically said not to mean certain. Further, the Full Court’s view that necessary and appropriate are different, appears to be contrary to Beach J’s statement that ‘to ensure’ provides the relevant element of necessity in another guise. However, although McCulloch v Maryland spoke of necessary being able to mean convenient, or useful, depending on the context, the Full Court did not set the bar at that lower point. See Michael Legg and James Metzger, ‘Section 33ZF: Class Actions Problem Solver?’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions in Australia: 1992-2017, Ross Parsons Centre (2017). The ‘reasonably adapted’ test was employed again by the Full

Court in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98 at [74].

Use of General Power 32.10 The general power has been used in a wide range of circumstances, including: order fixing a date by which claimants must identify themselves, that is, closing the class: McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1 at 4; Hodges v Waters (No 5) [2014] FCA 965 at [6]; Inabu Pty Ltd v Leighton Holdings Ltd [2014] FCA 622 at [17]; Farey v National Australia Bank Ltd [2014] FCA 1242 at [11]; to regulate the correspondence between the respondents to a representative proceeding and the group members on whose behalf the proceeding is brought if the circumstances warrant it: King v AG Australia Holdings Ltd (2002) 121 FCR 480 at [31]–[32]; Johnstone v HIH Ltd at [104]–[105]; dispensing with the requirement to give notice of the right to opt out in a closed class: Vernon v Village Life Ltd [2009] FCA 516 at [65]–[75]; order reinstating a group member after it has exercised the right to opt out under s 33J: King v AG Australia Holdings Ltd [2002] FCA 364 at [6]; Darcy v Medtel Pty Ltd [2002] FCA 925 at [7]; Paxtours International Travel Pty Ltd v Singapore Airlines Ltd [2012] FCA 426; to order discovery from a group member: P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176 at [15]; [page 480] power to order oral discovery similar to a United States style deposition: Jones v Treasury Wine Estates Ltd (2016) 241 FCR 111 at [29]; power to issue a subpoena to obtain group member contact information to be able to inform the group about the class action: Muswellbrook Shire Council v Royal Bank of Scotland Nv [2013] FCA 616 at [39], including a

subpoena to a foreign addressee, and to grant leave to serve the subpoena outside Australia: Ceramic Fuel Cells Ltd (in liq) v McGraw-Hill Financial, Inc (2016) 245 FCR 340 at [65]–[68]; to regulate multiple class actions: Kirby v Centro Properties Ltd (2008) 253 ALR 65 at [31], [37]; McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 at [61]; permitting various aspects of a settlement, such as authorising the applicant to enter into and give effect to a settlement agreement for and on behalf of the group members: Brannaghan v Thiess Pty Ltd and Degremont Pty Ltd [2013] FCA 790; Hopkins v AECOM Australia Pty Ltd (No 8) [2016] FCA 1096; authorising a reimbursement payment for an applicant as part of a settlement: Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322; [2006] FCA 1388 at [76]; P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 at [29]; Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2011] FCA 671 at [2]; approving the legal costs charged by the lawyer for the applicant: Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167; 166 ALR 731; [1999] FCA 1363 at [35]–[37]; Hopkins v AECOM Australia Pty Ltd (No 8) [2016] FCA 1096; authorising the payment of settlement administration costs to the administrator: Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2011] FCA 1402; Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd (No 2) [2011] FCA 1506; Scott v Oz Minerals Ltd [2013] FCA 182; amending a settlement deed to permit the engagement of assessors to assist the scheme administrator: Rowe v Ausnet Electricity Services Pty Ltd (Ruling No 6) [2016] VSC 166; appointing an independent cost consultant to conduct a review of the costs of a settlement fund administration: Matthews v AusNet Electricity Services Pty Ltd (Ruling No 40) [2015] VSC 131; Rowe v Ausnet Electricity Services Pty Ltd (Ruling No 6); making a ‘funding equalisation order’ to redistribute settlement funds from unfunded group members to all group members: Dorajay Pty Ltd v

Aristocrat Leisure Ltd [2009] FCA 19 at [14]–[17]; P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 at [28]; permitting a litigation funder to be paid by group members through a common fund: Money Max Int Pty Ltd v QBE Insurance Group Ltd; altering the fee charged by a litigation funder to group members as part of the settlement approval process: Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 6) [2011] FCA 277 at [42]; Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433. [page 481]

Common Issues 32.11 On numerous occasions, the court has used its powers pursuant to s 33ZF to identify and isolate the common issues and questions to be determined in a representative proceeding. In Bright v Femcare Ltd (2002) 195 ALR 574; [2002] FCAFC 243 at [21], the court stated that it is unjust for a respondent to be vexed with a representative proceeding over a long period during which the unmeritorious nature of the claim remains hidden because it resides in non-common issues. Those proceedings ought to be managed in such a way that the common issues can be determined, so that the determination binds the applicant and group members (in accordance with ss 33Z and 33ZB), and contemporaneously a selected number of the individual claims can be finally determined on their non-common issues pursuant to ss 33Q and 33ZF. 32.12 In Peterson v Merck Sharpe and Dohme (Australia) Pty Ltd (No 3) [2009] FCA 5, the respondents sought orders pursuant to s 33ZF requiring the precise identification of the common issues to be determined as part of the applicant’s case. The first instance judge denied the application, and the respondents successfully appealed to the Full Court. In granting the application, the Full Court held that it was desirable, if not necessary, to identify precisely what issues would be determined in the trial on the assumption that at the end of the trial, Mr Peterson’s claim (personal

to him) would be determined and orders would be made which reflected the judge’s determination on questions of fact and law: see Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26 at [6]. In relation to the common issues, the court found that they should be identified and framed as questions. However, if it becomes apparent that an issue relates only to the claims of one particular member, then it will not be determined: at [8]. This has led to a practice where a preliminary question in the lists of questions is usually expressed as ‘Is this a question common to the group members?’, and it is only if that preliminary question is answered in the affirmative that the issue is determined.

Trial of Separate Questions 32.13 In Andrews v Australia and New Zealand Banking Group Ltd (2011) 281 ALR 113; [2011] FCA 388 at [19], the applicants sought an order pursuant to ss 33Z(1), 33ZF(1) and/or 37P(2) that the court determine certain questions separately and before any other issue in the proceedings. Gordon J ordered that there be a trial of the separate questions, to provide a basis for the parties to better assess their risk, which will inevitably contribute to a better prospect of settlement: at [71]. [page 482]

Multiple Proceedings 32.14 In Kirby v Centro Properties Ltd, the court, of its own motion, was minded to use s 33ZF to resolve issues concerning multiple actions commenced in relation to the same facts and circumstances. In this case, three representative proceedings were commenced in relation to the same subject matter. The respondent in all three actions sought orders pursuant to s 33ZF that one of the proceedings be stayed. Finkelstein J rejected that application and stated that the court had power pursuant to s 33ZF to require the formation of a litigation committee (constituted by group members) to manage the proceeding by ensuring that a broad range of group members

could oversee each action, so that the widest range of interests were accounted for: at [37]. 32.15 In Smith v Australian Executor Trustees Ltd [2016] NSWSC 17, Ball J considered the future of two overlapping representative proceedings brought against Australian Executor Trustees Limited arising out of the collapse of Provident Capital Limited. The question the subject of that judgment was whether both proceedings should have been permitted to continue and, if so, on what terms. His Honour noted that s 183 provided the court with power to make orders rectifying the overlap. His Honour concluded that it (at [25]): … would not be in the interests of justice to permit both proceedings to continue with overlapping group members.

Ball J made orders that the two overlapping proceedings be heard together and that evidence in one be evidence in the other. His Honour recognised that more needed to be done to resolve the overlap between group members, and that there was accordingly a choice between: (a) staying the Smith proceedings (brought on behalf of a closed class of debenture holders who had signed a funding agreement); and (b) giving debenture holders who were members of the Smith class an option to continue in the Smith proceeding alone or in the Creighton proceeding alone. An order would also be made deeming Smith class members who failed to opt out of the Smith proceedings by a certain date, to have opted out of the Creighton proceedings (thereby resolving any residual overlap). It was noted that the first option involved the court imposing a choice on members of the Smith class which at least superficially appeared to be inconsistent with the choice they had made to date. As such, the latter option was preferable. In making orders requiring the parties to draft opt-out notices resolving the overlap, his Honour observed (at [47]): The two proceedings offer true alternatives in the sense that they have different funding models and frame their cases in significantly different ways. The choice is not simply which legal advisors should be permitted to advance

[page 483] what is effectively the same proceeding. The Creighton Proceeding has one substantial advantage over the Smith Proceeding in terms of costs in the event that there is a settlement. But otherwise the choice between them is not an easy one to make. If the court makes the choice that will simplify the proceedings and reduce costs. But for the reasons I have given, I do not think that that can be a decisive consideration. It may be accepted that the debenture holders are unsophisticated litigators. But there is no evidence before the court to suggest that they would be incapable of making a choice between the two proceedings if presented with material to assist them in doing so. The choice that is made could have significant consequences for debenture holders. In those circumstances, and where the choice is not obvious, in my opinion, it is inherently undesirable for the court to make it on behalf of debenture holders. It seems to me that it is possible to devise a mechanism to permit a choice to be made by debenture holders which will ensure that AET does not ultimately have to deal with two proceedings brought on behalf of the same individuals.

32.16 In McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947, Beach J dealt with two open class actions, the McKay proceedings (which also had 1500 signed up group members) and the Basil proceedings (which also had 1000 signed up group members) by closing the class in the Basil proceedings so that it was limited to the signed up group members only and allowing the McKay proceedings to continue as an open class action. This had the result that unsigned group members could only be part of the McKay proceedings and an overlap in group membership, which could be an abuse of process, was avoided. Both class actions would be jointly case managed with a view to conducting a joint trial. The respondent’s application for a permanent stay of either class action was denied, principally because it would unnecessarily interfere with the choice of lawyer and funder by a large number of group members. Beach J (at [41]) found that s 33ZF did not provide the power to stay one of two competing class actions and instead the court’s inherent powers would need to be relied on. However, s 33ZF did provide the power ‘to make a class closure order that eliminates the existence of overlapping group members in two competing class actions’: at [61]. By closing the class in one proceeding the duplication of group membership, and the possibility of an abuse of process, was eliminated. 32.17

See also Hassid v Queensland Bulk Water Supply Authority t/as

Seqwater [2017] NSWSC 599; Mitsub Pty Ltd v McGraw Hill Financial Inc [2016] FCA 1285, regarding overlapping representative proceedings.

Settling Class Actions 32.18 Although other provisions deal specifically with the settlement of representative proceedings (see ss 33V (Chapter 22) and 33W (Chapter 23)), the power conferred by s 33ZF has been used in relation to procedural aspects of settling representative proceedings. [page 484]

Legal Costs 32.19 The court has a supervisory or protective role in relation to legal costs proposed to be charged to class members: see Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd at [90]. 32.20 In the GPT shareholder class action, Gordon J issued three judgments addressing the issue of legal costs: Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd (No 2) [2013] FCA 1163; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd (No 3) [2014] FCA 680. In the first judgment, Gordon J explained (at [26]–[27]): The rationale for the court’s ‘surveillance’ over costs as between solicitor and client was explained by Tadgell J in Redfern v Mineral Engineers Pty Ltd [1987] VR 518 at 523 in the context of a taxation: The court’s surveillance over costs as between solicitor and client is assumed with a view to preventing any unfair advantage by solicitors in their charges to their clients. It stems, it seems, from the notion that ordinarily a solicitor is presumed to be in a position of dominance in relation to [a] client as a result of [their] presumed knowledge of the law and of what may and may not be properly charged by way of fees. Were a strict view not taken it might be open to a solicitor to overreach his client or otherwise act oppressively towards [the client] on the matter of costs. This is not a taxation. But it is unique. The solicitor is acting for itself — it seeks an order

that its costs be approved by the Court and paid to it. There is no contradictor. The group members who are to share the liability for the fees and disbursements are unable to oppose the application. They are unable to oppose the application because although four group members obtained access, on a confidential basis, to the Settlement Distribution Scheme, that document did not record the amount of fees and disbursements the subject of the approval application or the how the sums were quantified. In addition, no group member has had access to the confidential affidavit of the costs consultant retained by Slater & Gordon that was filed in support of the application and set out the amount of fees and disbursements Slater & Gordon sought to have approved by the Court. The inability of the group members to act as a contradictor provides a further example of the ‘position of dominance’ referred to by Tadgell J. …

32.21 The costs consultant retained to provide an expert opinion on the reasonableness of the legal costs and disbursements incurred was subject to criticism. In the judgment, Gordon J was not satisfied that the report provided the court with the basis for approving the law practice’s fees. Her Honour noted that the amount claimed by the applicant’s lawyers was almost three times the original estimate of $3,500,000 (which the report failed to explain), that the hourly charge out rate seemed to have increased by 5% with no demonstrated notice of that increase to the members, and the costs for discovery (based on a rate of $550/hour) [page 485] seemed unreasonable. The costs agreement signed by (most of) the group members did not seem to be properly referred to and utilised in the assessment of costs by the consultant. Gordon J stated (at [35]): It is the judicial officer (not an independent costs expert) that is required to determine whether the fees and disbursements are reasonable. Second, the information to be provided to that judicial officer must be ‘sufficient’ to enable that judicial officer to undertake that assessment.

Followed in Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 at [355]. 32.22 Gordon J explained the role of the court as involving two aspects: the test to be adopted by the court and then the material necessary to undertake the assessment. The task of the court is not a taxation. Rather, the

questions for the court in assessing the fees and disbursements claimed by the lawyers are (at [32]): 1.

2.

are the fees and disbursements of an unreasonable amount having regard to, inter alia, the nature of the work performed, the time taken to perform the work, the seniority of the persons undertaking that work and the appropriateness of the charge out rates for those individuals; and if the work is unreasonable in the circumstances, can the group members be considered to have approved (explicitly or impliedly) the costs claimed.

See also Downie v Spiral Foods Pty Ltd [2015] VSC 190 at [179]; Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 at [120]; Stanford v DePuy International Ltd (No 7) [2017] FCA 748 at [12]. (In determining whether to approve the deduction of costs from the settlement sum, courts must be satisfied that the costs claimed are ‘reasonable in the circumstances’. This does not necessarily require a taxation of the costs claimed (although it may), but rather the tendering of ‘sufficient’ evidence so as to enable the court to make an assessment as to whether the costs were reasonably incurred.) 32.23 The types of information that should be put before the judge were stated to include (at [37]): 1. 2. 3. 4. 5.

whether the work in a particular area, or in relation to a particular issue, was undertaken efficiently and appropriately; whether the work was undertaken by a person of appropriate level of seniority; whether the charge out rate was appropriate having regard to the level of seniority of that practitioner and the nature of the work undertaken; whether the task (and associated charge) was appropriate, having regard to the nature of the work and the time taken to complete the task; and the ratio of work and interrelation of work undertaken by the solicitors and the counsel retained.

[page 486] 32.24 The approach was followed in Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 at [352], which also set out the methodologies of two independent costs consultants that resulted in the court approving legal costs and disbursements of $60 million: at [356]–[381].

32.25 In Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 at [53]–[54], the court explained that the precision with which a court will require a plaintiff (or its representatives) to justify the quantum of costs incurred will vary according to a number of factors including: (a) the quantum of the costs; (b) the quantum relative to the settlement sum; (c) whether the group members have antecedent contractual obligations in respect of the costs (for instance, where they are all clients of the same solicitors, or of a commercial litigation funder); (d) whether the group members were notified of the costs arrangements established for the proceeding; and (e) the scale and duration of the steps in respect of which the costs were incurred. This then has the effect that ‘a very large costs sum might readily be approved in a settlement following a lengthy trial, while an apparently-modest costs sum might require more exacting validation if it is associated with a modest-sized proceeding and represents a significant proportion of the overall settlement sum’: at [54]. 32.26 In addition to the guidance provided on demonstrating the reasonableness of legal fees and disbursements, Gordon J in Modtech (at [24]) also adopted the position that although only 92% of group members had entered into a retainer agreement the other 8% should nonetheless be bound by the costs arrangements so as to avoid free-riding. See also Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194 at [40]; Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 at [90] (‘It is fair and reasonable that unfunded RCMs pay a proportionate share of the legal costs incurred to obtain a settlement from which they claim a benefit’). 32.27 Proportionality of legal costs has become an important consideration: Newstart 123 Pty Ltd v Billabong International Ltd at [45]; Foley v Gay [2016] FCA 273 at [24]. In the latter case, Beach J observed (at [24]): I do accept, however, that what is claimed for legal costs should not be disproportionate to the nature of the context, the litigation involved and the expected benefit. The Court should not approve an amount that is disproportionate. But such an assessment cannot be made on the simplistic basis that the costs claimed are high in absolute dollar terms or high as a percentage of the total recovery. In the latter case, spending $0.50 to recover an expected $1.00 may be proportionate if it is necessary to spend the $0.50. In the former case, the absolute dollar amount as a free-standing figure is an irrelevant metric. The question is to compare it with the benefit sought to be gained from the litigation. Moreover, one should be

careful not to use hindsight bias. The question is the benefit reasonably expected to be achieved, not the benefit actually achieved. Proportionality looks to the expected realistic return at the time the work being charged for was performed, not the known return at a time remote from when the work was performed; at the

[page 487] later time, circumstances may have changed to alter the calculus, but that would not deny that the work performed and its cost was proportionate at the time it was performed. Perhaps the costs claimed can be compared with the known return, but such a comparison ought not to be confused with a true proportionality analysis. Nevertheless, any disparity with the known return may invite the question whether the costs were disproportionate, but would not itself answer that question.

32.28 The importance of legal costs suggests it would be prudent and appropriate to include details of any proposals in relation to the payment of legal fees in the ‘opt-out’ notice: see the observations in King v GIO Australia Holdings Ltd [2001] FCA 270 at [15]–[17].

Litigation Funding Fees 32.29 The court also has a supervisory or protective role in relation to litigation funding charges: Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd at [90]. 32.30 In Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 6) at [42]–[43], Flick J held that, short of refusing approval to a settlement, it may be that s 33ZF confers a power on the court to approve a settlement subject to a condition limiting the amount payable to the litigation funder. A settlement should not be approved without the court hearing submissions and perhaps evidence from the funder concerned. That evidence may address both the risks of providing funding in the proceeding presently before the court and the risks incurred more generally in providing funding in other proceedings. Such a conditional order would not itself operate as any variation of the contractual agreement reached between the funder and each group member.

32.31 The Full Court of the Federal Court of Australia in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 338 ALR 188; [2016] FCAFC 148, held that a litigation funder could be the beneficiary of a ‘common fund order’, meaning that the litigation funder could be paid a fee from the fund created as a result of a successful class action settlement or judgment, but without contracting with all group members. However, the court was only willing to make the orders on the basis that the court would determine the amount of the funder’s fee. The Full Court relied on s 33ZF and held that the orders were ‘appropriate to ensure that justice is done in the proceeding’ because (at [167]): First, class members will be properly informed, prior to deciding whether to opt out, of the requirement to pay a reasonable Court-approved funding commission out of any settlement or damages. Second, it is in class members’ interests that there be Court scrutiny of the Funding Terms and Court approval of the funding commission rate. Third, it is likely that upon approval the applicant and funded class members will enjoy a lower funding commission rate (and unfunded class members will suffer a lower deduction than under a

[page 488] funding equalisation order). Fourth, for the reasons that we have set out, the proposed orders will ensure that all class members are treated equally, which will provide a more secure foundation for the funding of the proceeding and which is appropriate to ensure that justice is done in the proceeding. Fifth, the whole premise of QBE’s argument is that the proposed orders will be substantially detrimental to class members and that cannot be sensibly said to be the case when we are not setting the commission rate(s) and where a condition is imposed that class members not be worse off. Sixth, the potential for conflicts of interest between funded and unfunded class members and between the applicant’s solicitors and unfunded class members will be reduced.

32.32 However, it should be noted that under the Money Max approach, the issue of power is less important because the orders proposed by the Full Court are contingent on the litigation funder agreeing. The litigation funder through its undertaking accepts that the court can determine the funder’s fee. The effect of the orders is that the operation of the common fund is at the election of the funder. The funder can elect not to give the undertaking and instead retain the contractual arrangements agreed with the funded group members. If the undertakings are given then the court will determine

the amount of the funder’s commission at the conclusion of the proceedings, once a settlement or judgment has occurred. All group members will bear the legal costs and the funder’s commission equally. 32.33 In Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433, the court considered if it had power to ‘make orders approving a proposed settlement but disallowing or varying the funding commission to be deducted from class members’ settlement amounts under the settlement’: at [134]. Murphy J found that the reasoning in Money Max rebutted the applicant’s argument that the language of s 33ZF enshrines an ‘element of necessity’ and the power under the section can only be employed where the court considers that, unless it made a specific order, justice would not be done in the proceeding: at [131]. Murphy J cited Money Max as authority for the view that (at [156]): The requirement that an order to disallow or to reduce the funding commission can only be made if the Court thinks it ‘appropriate or necessary to ensure that justice is done in the proceeding’ does not mean that the Court must consider that justice is certain (in the sense of ‘ensured’) if the proposed order is made or that injustice is certain if the order is not made. It requires only that the proposed order be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding.

The applicant also argued that s 33ZF only applied to achieving justice ‘in the proceeding’ and ‘pertaining to the attainment of justice in respect of the matters in issue between the parties to the proceeding’. The applicant argued that the rate of funding commission charged by a funder pursuant to a funding agreement is outside, rather than in the proceeding, as it relates to a decision by a group member to pay a portion of any prospective settlement distribution entitlement to a third party. The applicant went further and argued that even if the court [page 489] considered the funding agreement to be misleading or unlawful, that would be a controversy falling outside the scope of ensuring that justice is done in the proceeding: at [130]. Murphy J rejected the argument as the court must frequently determine issues between group members, rather than just

between the parties, that is, the applicant and respondent: at [153]. Further, his Honour said (at [155]): Earglow’s contention that, even if the Court considered that a funding agreement is misleading or unlawful, that that would be a controversy falling outside the scope of ensuring that justice is done ‘in the proceeding’, is impossible to accept. If class members were misled as to the requirement to pay a funding commission I would have no difficulty in concluding that a settlement that proposed the deduction of that commission from class members’ settlement amounts was not fair or reasonable in their interests.

After finding that the court has the power to vary the funder’s commission, the power did not need to be exercised as the court found that the funding commission was fair and reasonable. 32.34 In Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (No 3) [2017] FCA 330, a litigation funder’s fee was also reviewed by a court. However, there Beach J relied on s 33V(2) rather than s 33ZF. See Chapter 22. The power to alter litigation funders’ contractual arrangements is likely to remain controversial until settled by an appellate court. Ray Finkelstein, ‘Class Actions: The Good, The Bad and The Ugly’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions in Australia: 1992-2017 (Ross Parsons Centre, 2017) 432; Justice MBJ Lee, ‘Varying Funding Agreements and Freedom of Contract: Some Observations’, IMF Bentham Class Actions Research Initiative with UNSW Law Conference: Resolving Class Actions Effectively and Fairly, 1 June 2017.

Litigation Funding, Equalisation Orders and the Common Fund 32.35 In a typical litigation funding arrangement, the funder (usually a commercial entity) will enter into an agreement with one or more potential litigants. The funder pays the costs of the litigation (such as the lawyer’s fees, disbursements, project management and claim investigation costs) and usually accepts the risk of paying the other party’s costs in the event that the claim fails through providing the plaintiff with an indemnity. In return, if the claim is successful, the funder will receive a certain percentage of any funds recovered by the litigants either by way of settlement or judgment, and

the litigants will assign the funder the benefit of any costs order they receive. The share of the proceeds is agreed with the litigants. 32.36 Equalisation orders arose because in an open class action the litigation funder has not contracted with all group members. The courts have relied on s 33ZF to make two types of orders. In the first category, the order operates so as to deduct from a non-funded group member’s entitlement an amount equal to [page 490] the commission payable to the litigation funder by the funded group members which is then redistributed across all group members: Dorajay Pty Ltd v Aristocrat Leisure Ltd at [17]; P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 at [26]–[28]. In the second category, the orders require unfunded group members to pay the same percentage fee as the funded group members, but directly to the litigation funder: Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3) [2012] VSC 625 at [20]; Farey v National Australia Bank Ltd [2014] FCA 1242. In Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [55]– [61], orders seeking the second category of equalisation order were rejected and the first category was made instead. See also Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539 at [163]–[166], comparing the two categories of funding equalisation orders. 32.37 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 338 ALR 188; [2016] FCAFC 148 introduced a third category or a new variation being the common fund order that operates the same as the second category except that the court determines the fee, not the contract. 32.38 The common fund order is derived from US class actions practice and was put forward in the academic literature as a way to encourage the use of an open class which promotes access to justice, as a protection for group members to avoid over-payment and to avoid multiple class actions: Michael Legg, ‘Institutional Investors and Shareholder Class Actions: The Law and

Economics of Participation’ (2007) 81 Australian Law Journal 478 at 488–9; Michael Legg, ‘Reconciling Litigation Funding and the Opt Out Group Definition in Federal Court of Australia Class Actions — The Need for a Legislative Common Fund Approach’ (2011) 30 Civil Justice Quarterly 52; Jarrah Hoffmann-Ekstein, ‘Funding Open Classes through Common Fund Applications’ (2013) 87 Australian Law Journal 331. 32.39 To illustrate the operation of the above orders, assume a $200 settlement with $100 to funded group members and $100 to unfunded group members with the funder to receive a fee of 20% of gross recovery. Under a common fund and an equalisation order with a direct payment to the funder (category 2), the funder receives 20% of $200 or $40. Under an equalisation order where unfunded group members have their recovery reduced by 20% and it is redistributed across all group members (funded and unfunded), the funder obtains 20% of funded group members’ recovery, that is, $20 and possibly 20% of the amount transferred from the unfunded group to the funded group, that is, 20% of $10, that is, $2, giving a total of $22.

Amending the Group Definition 32.40 In Williams v FAI Home Security Pty Ltd (No 5) [2001] FCA 399, the applicants sought leave to amend the application by replacing the current definition of group members with the 495 ‘known’ group members who had instructed the [page 491] law firm representing the lead applicant: at [5], [10]. The applicants also sought a consequential order pursuant to s 33ZF that the court declare that the persons bound by the settlement of the proceeding were the 495 known group members. Goldberg J granted the applicants leave to amend the application in the manner proposed and declared that the persons bound by the settlement of the proceeding were the respondents, the 495 known group members and the

persons who were the beneficiaries of the undertaking proffered by the respondents and who accepted their offer: at [27].

Closing the Class 32.41 To facilitate settlement, courts have made ‘class closure’ orders which require group members to come forward and register their interest. Section 33ZF has been relied upon as the source of power to ‘close the class’ in a representative proceeding. 32.42 ‘Closing the class’ will often involve orders which have the effect of extinguishing the rights of any group members who do not come forward to participate in the settlement process. The issue of how and when class closure should occur has received considerable attention from the court. However, there are divergent views about how and when this should occur. Examples of ways in which class closures have occurred, prior to and at the time of settlement, include: (a) an order requiring group members to identify themselves by a certain date with failure to complete that step having the effect that the group member cannot participate in any recovery, whether by settlement or judgment, and the group member’s claim is extinguished or barred. The effect of class closure using this type of order is well described by Jacobson J in Inabu Pty Ltd v Leighton Holdings Ltd, where his Honour explained (at [17]): … if the group member does nothing and the settlement is approved, the group member will not receive compensation but will be bound by the settlement and will not be able to claim compensation from Leighton in the future in relation to the circumstances giving rise to the present proceeding. (b) extending the opt-out date to a date that is after the court approves the settlement and stipulating that the judgment will bind all those group members who have not opted out: see, for example, Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678; Jarrama Pty Ltd v Caltex Petroleum Pty Ltd [2004] FCA 1114; (c) amending the group definition in the originating process so as to limit the group (for example, by way of a schedule of group members): see ss 33K (Chapter 11) and 33ZF (Chapter 32); Williams v FAI Home Security Pty Ltd (No 5); Matthews v SPI Electricity Pty Ltd [2013] VSC 17; Casey v State Trustees Ltd [2010] FCA 163. In King v AG Australia Holdings Ltd (Federal Court of Australia, Proceeding No N955 of 1999, orders

[page 492]

made 19 June 2003), Moore J made orders for the group definition to be redefined by reference to whether shareholders had returned a form to participate in the class action. Moore J proceeded on the basis that any judgment was to bind only the members of the redefined group; however, the matter settled with the settlement only benefiting the members of the redefined group. See Michael Moore, ‘Ten Years Since King v GIO’ (2009) 32 (3) UNSW Law Journal 883 at 891–4; Matthews v SPI Electricity (Ruling No 13) (2013) 39 VR 255; [2013] VSC 17 at [27]–[28].

32.43 In Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296, the Federal Court adopted a different approach. Registration was required to facilitate a mediation and group members could only participate in any settlement if they had registered. If a settlement was achieved and approved by the court then unregistered group members obtained no recovery and lost their right to claim. However, unlike past orders, if no settlement was reached then unregistered group members could still participate in any judgment. The judgment was appealed to the Full Court of the Federal Court of Australia. While the Full Court did not need to expressly address the novel class closure order, it chose to provide guidance as it considered class closure to be an important part of class action procedure: Melbourne City Investments Pty Ltd sury Wine Estates Ltd. The primary judge expressed doubt that the court had power to make an order, before the initial trial of a class action, to extinguish a group member’s right to share in the fruits of a subsequent judgment unless the group member took steps to register in the proceeding. However, the judge did not rule on that question and instead addressed the issue as an exercise of discretion, ruling that it was not necessary or appropriate to make orders extinguishing the unregistered group members’ claims at that time. 32.44 The Full Court considered the power to make class closure orders. It accepted that requiring group members to take active steps to ‘register’ in order to share in a settlement of a class action undercut to some extent the opt-out rationale underpinning the class action regime. However, the Full Court found that there was power to make a class closure order relying on s 33ZF (at [74]): … if a class closure order operates to facilitate the desirable end of settlement, it may be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding and

therefore appropriate under s 33ZF of the Act. The courts have accepted on numerous occasions that, in order to facilitate settlement, it is appropriate to make orders to require class members to come forward and register in order to indicate a willingness to participate in a future settlement, and to make orders that class members be bound into the settlement but barred from sharing in its proceeds unless they register: see for example, Matthews v SPI Electricity (Ruling No 13) (2013) 39 VR 255; [2013] VSC 17 at [22]–[80]; Farey v National Australia Bank [2014] FCA 1242 at [11]–[16]; Inabu Pty Ltd v Leighton Holdings Pty Ltd [2014] FCA 622 at [17]–[22]; Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194 at [67]–[68].

[page 493] 32.45 However, the Full Court (at [76]) observed that if a settlement was not achieved ‘an order to shut out class members who do not respond to an arbitrary deadline’ is not one that is appropriate or necessary to ensure that justice is done in the proceeding.

Timing of Class Closure 32.46 In Matthews v SPI Electricity (Ruling No 13), Forrest J observed that ‘[i]f a class is to be closed, with such binding effect, the timing of such orders is important’. His Honour explained that there are many examples of classes being closed subsequent to judgment or settlement so as to give finality to the proceeding but that judges are reluctant to make class closure orders at an early point in the proceeding. 32.47 Timing is important because knowing the outcome of a class action, such as that there is a fund to be distributed, or at least having progressed through the litigation process so that prospects of success and likely recovery are capable of better estimation, will be an important factor in whether group members take the time to complete and return forms. Early class closure processes where the outcome of the class action is not known can undermine the access to justice objective of the class action. See Pharm-aCare Laboratories Pty Ltd v Commonwealth (No 6) at [14]; Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd at [45]. 32.48

In Winterford v Pfizer Pty Ltd [2012] FCA 1199 at [9], Bromberg J

declined to make a class closure order in circumstances where the pleadings were not closed, common questions had not been settled, opt-out notices had not been sent out, no settlement discussions had been undertaken, and no settlement discussions were proposed unless the court made a class closure order. See also Camping Warehouse Australia Pty Ltd (formerly Mountain Buggy Australia Pty Ltd) v Downer EDI Ltd [2015] VSC 122 at [16]. 32.49 In Matthews v SPI Electricity (Ruling No 13), Forrest J expressed the approach to be taken by judges as follows (at [76]): Ultimately, it is a question of balance and judicial intuition. It requires a determination as to when in the course of a proceeding it is appropriate and in the interests of the group as a whole to require a step to be taken which may promote a prospective settlement as against simply letting the case proceed, perhaps interminably, without requiring group members to lift a finger — even if that course leads to disaster.

32.50 This approach was endorsed by the Full Federal Court in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd at [79]: Whether it is appropriate to order class closure is a question of balance and judicial intuition. The Court must take into account the interests of the class as a whole in requiring class members to take steps to facilitate settlement,

[page 494] and consider the surrounding circumstances including the point the case has reached, the attitude of the parties, and the complexity and likely duration of the case: see Matthews v SPI No 13 at [75]–[79]. This will often involve striking a balance between the conflicting interests of class members.

Dispensing with the Opt-out Notice 32.51 Section 33ZF has also been relied upon as a source of power to dispense with notice requirements in relation to settlements. In Vernon v Village Ltd, Jacobson J considered whether he ought to make an order dispensing with the requirement of ss 33J and 33X(1) that the court is to fix a date for group members to opt out of a representative proceeding. His Honour considered King v GIO Australia Holdings Ltd [2001] FCA 270,

where the Full Court observed that the opt-out requirements ensure group members can make an informed decision about their rights, after reading a clear and simply expressed opt-out notice: at [15]–[16]. His Honour identified a number of factors relevant to the exercise of the court’s discretion in that case, including that: the group members had been previously notified by at least two letters from Slater & Gordon of their right to opt out, and were invited on those occasions to indicate whether they wished to exercise their entitlement to opt out. No group member indicated any wish to opt out; and the cost of providing a further notice to group members, including the cost of any mailout and adjourning the application before the court, would be borne by the applicants, which in light of the opportunities to opt out already presented to group members ‘would seem to be a futile exercise’: at [69]. As such, Jacobson J exercised his power under s 33ZF to order that the optout requirements of ss 33J and 33X(1)(a) be dispensed with. His Honour was satisfied that by the correspondence from Slater & Gordon to group members, notice had been given in satisfaction of s 33X(4). For a critique of the decision, see Michael Legg and James Metzger, ‘Section 33ZF: Class Actions Problem Solver?’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions in Australia: 1992-2017, Ross Parsons Centre (2017). See also Earglow Pty Ltd v Sigma Pharmaceuticals Ltd [2012] FCA 149.

Dealings with Individual Group Members 32.52 Section 33ZF cannot be read as prohibiting the respondent to a representative proceeding from communicating with a group member. While it confers power on the court to make any order it thinks appropriate or necessary to ensure justice is done in the proceeding, it does not prohibit conduct which is otherwise lawful: Courtney v Medtel Pty Ltd at [52]. Accordingly, neither s 33ZF nor any other provision in Pt IVA prevents a respondent communicating with a group member in a manner which is not misleading or otherwise unfair and which does not infringe any other law or ethical constraint (such as a professional

[page 495] conduct rule requiring solicitors to communicate with a represented group member through their legal representatives): Courtney v Medtel Pty Ltd; Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 5) [2009] FCA 1053 at [4], [8], [10]. 32.53 This principle also applies to an offer made by a respondent to settle the claims of individual group members. This reflects the general policy of the law to encourage out of court settlement of disputes and to promote the individual’s right to enter negotiations for settlement without inhibition: Cutts v Head [1984] Ch 290 at 306 per Oliver LJ. See particularly: Courtney v Medtel Pty Ltd at [53]–[54], where Sackville J stated there is nothing in s 33ZF or any other provision in Pt IVA which invalidates a settlement reached between an individual group member and the respondent without prior approval of the court, unless s 33V(1) or s 33W applies. Of course, if a settlement is reached in consequence of misleading, unfair or unlawful conduct by or on behalf of a respondent, s 33ZF would empower the court to intervene or set the settlement aside if such an order is appropriate to ensure that justice is done. For this reason, a respondent might be well advised to ensure that each unrepresented group member receiving an offer understands the desirability of obtaining independent advice in relation to that offer and has sufficient opportunity to do so. Ultimately, however, s 33ZF does not prevent an agreement being reached between a respondent and a group member as a consequence of direct communications between them. King v AG Australia Holdings Ltd [2002] FCA 872, where Moore J stated (at [31]–[32]) that communication involving unrepresented group members should, prima facie, involve the court. His Honour stated that this issue is best dealt with by requiring the respondent’s solicitors to forward the applicant’s solicitors a draft of any correspondence proposed to be sent to unrepresented group members. If the correspondence is controversial, the applicant’s solicitors could seek directions about the

correspondence and, if necessary, an order could be made restraining the respondents from sending the correspondence to unrepresented group members before it was considered by the court. Moore J stated that the court has power to impose such a regime under s 33ZF.

Execution of Settlement Agreement by Applicant on Behalf of All Group Members 32.54 The court has relied on s 33ZF to order that an applicant be authorised nunc pro tunc to settle the proceedings on behalf of the group members. In Brannaghan v Thiess Pty Ltd and Degremont Pty Ltd (t/as Thiess Degremont Joint Venture) [2013] FCA 790, the court ordered pursuant to s 33ZF that the applicant be authorised nunc pro tunc on behalf of the group members to enter into and give effect to the settlement agreement on behalf of the group members. [page 496] This form of order has been used on a number of occasions including Stanford v DePuy International Ltd (No 6) [2016] FCA 1452, order 3; Foley v Gay [2016] FCA 273, order 6; Muswellbrook Shire Council v The Royal Bank of Scotland Nv [2017] FCA 414, order 7. The court may also authorise the applicants nunc pro tunc on behalf of the group members to enter into and to give effect to the transactions contemplated in the deed of settlement for and on behalf of the group members (Casey v State Trustees Ltd (ACN 064 593 148) at [5]; Muswellbrook Shire Council v The Royal Bank of Scotland Nv [2017] FCA 414, order 7) or the covenants contained in the deed of settlement: Construction, Forestry, Mining and Energy Union v Contract Blinds Pty Ltd [2009] FCA 572 at [9]; see also Taylor v Telstra Corporation Ltd [2007] FCA 2008.

Reinstating a Group Member After Opt Out

32.55 The court has occasionally used its power under s 33ZF to allow group members who had opted out to rejoin proceedings. In Paxtours International Travel Pty Ltd v Singapore Airlines Ltd, Webjet Marketing Pty Ltd (Webjet) opted out of the class action against Singapore Airlines, and then later completed a ‘Registration of Intention to Claim’ form stating that Webjet believed it was a group member and wished to register its intention to advance a claim against Singapore Airlines. Webjet sought interlocutory orders that it either be reinstated as a group member pursuant to s 33ZF, or be permitted to withdraw its notice of opt out and be included in the list of group members who had registered an intention to make a claim against Singapore Airlines. Robertson J stated that the factors relevant to the court considering whether it ought to readmit a group member include at ([42]–[43]): the reasons for opting out; the period of time between the opt-out notice and the application to reinstate and what steps, if any, have been taken in the proceedings between the time of the opt-out notice and the application to reinstate; the grounds for seeking reinstatement; any prejudice to the applicant, existing group members and the respondent or respondents; and the effect on the applicant of permitting or refusing reinstatement. His Honour held that the reason for and timing of Webjet’s application to be reinstated as a group member did not persuade him to exercise his discretion in the applicant’s favour in light of the provisions and purpose of Pt IVA, and, as such, ordered that Webjet’s interlocutory application be dismissed. 32.56 In Darcy v Medtel Pty Ltd [2002] FCA 925, 63 group members returned opt-out notices. However, it was later discovered that some of the opt-out notices [page 497]

sent to group members were missing the second page, which contained important information that might affect a group member’s decision either to opt out or not opt out of proceedings: at [5]. The parties agreed that steps must be taken to correct this error, and that s 33ZF provides the source of power for this to be done: at [7]. The respondents were of the view that only those group members who had not opted out of the proceedings should be sent a complete opt-out notice; however, the applicants argued that all group members should be re-sent notices. Sackville J ordered that opt-out notices be resent to all group members, as his Honour was of the view that those group members who had opted out of proceedings may have chosen to not opt out, had they received and considered the opt-out notice in its entirety. His Honour made clear that any group members who had opted out were to be given an opportunity to withdraw their opt-out notice: at [11]. His Honour clarified that had an application been made simply on the ground that group members who had opted out should be permitted to change their mind, the result may well have been different: see also King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 364 at [6] per Moore J.

Security for Costs 32.57 Security for costs may be ordered under either s 33ZF or the court’s inherent jurisdiction. See the discussion in s 33ZG (Chapter 33) regarding security for costs in representative proceedings.

Regulating Costs 32.58 While s 33ZF provides expressly that, in any proceeding (including an appeal conducted under Pt IVA), the court may make any order that it thinks appropriate or necessary to ensure justice is done in the proceeding it is unlikely that the provision acts to expand the range of appropriate orders as to costs to be made between parties to a proceeding: Qantas Airways Ltd v Cameron (No 3) (1996) 68 FCR 387 at 389; 148 ALR 378 at 380–1 per Lindgren and Lehane JJ.

Discovery from Group Members Other Than the Applicant 32.59 Although discovery will ordinarily only be sought in relation to a lead applicant, in some cases the court has used its power under s 33ZF to make orders requiring discovery from group members other than the lead applicant: see, for example, Thomas v Powercor Australia Ltd (Ruling No 1) [2010] VSC 489. While it is accepted that the court has the power to make such orders, whether it should exercise its powers in that manner is another matter: P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176 at [15]–[16]. The starting point in considering whether the power ought to be exercised is that the class actions regime under Pt IVA is designed to require little or no active involvement by group members. The test or standard for determining whether an [page 498] order for particulars of, or discovery from, group members should be made has been a demanding one, as shown by the language used by the courts: ‘compelling reason’ (P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) at [17]), ‘extraordinary circumstances’ (Thomas v Powercor Australia Ltd (Ruling No 1) at [39]) and ‘demonstrably necessary for the fair and just determination of a defendant’s case’ (National Australia Bank Ltd v Pathway Investments Pty Ltd (2012) 265 FLR 247 at [51]). However, in Victoria, the Court of Appeal (Nettle, Redlich and Osborn JJA) has cast doubt on whether there can be said to be any test or standard, with Regent Holdings Pty Ltd v Victoria (2012) 36 VR 424 rejecting the existence of any principle and preferring to focus on the existence of individual facts and circumstances. The class action was brought by Regent Holdings Pty Ltd against the state of Victoria and Southern Ocean Mariculture Pty Ltd (SOM), on its own behalf and on behalf of a closed class of 194 group members. The class action alleged that the state and SOM negligently allowed the release of a herpes-like virus, abalone viral ganglioneuritis, from an abalone aquaculture farm operated by SOM and

thereby caused each of the class members to suffer loss and damage. The judge at first instance had ordered that 14 class members provide particulars and discovery of documents relating to quantum. The judge made the orders to facilitate a court-ordered mediation. The orders were made to enable the state to make sensible decisions in settlement discussions. The appeal was based on a number of arguments, including that the judge had proceeded on the basis of an incorrect principle that ordering particulars and discovery as to quantum, in advance of the trial of the representative party’s claim, was now ‘standard practice’. Further, making the orders for the purpose of facilitating the mediation improperly involved the judge in the essentially consensual process of mediation and settlement. The Court of Appeal rejected a submission that it is generally accepted that a group member ought not be required to take any step in a class action until after determination of the representative party’s claim. After considering the judgment of Gaudron, Gummow and Hayne JJ in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at [38]–[41] as to the status of group members, the Court of Appeal stated that it is not of the essence of a class action that group members not be required to take any positive step before common questions are resolved, but rather, in some class actions that approach will follow. Yet in other class actions, such as the one under consideration, group members may be asked to take certain steps. Central to the Court of Appeal’s position were the existence of different types of group definition — an open or opt-out class action as employed in Mobil Oil, compared to a closed class as was adopted in the abalone class action. The Court of Appeal observed (at [14]): … in a case like the present, where the Group is limited and in effect closed; all members of the Group are represented by the one firm of solicitors; and the litigation is maintained by a single litigation funder for the benefit of

[page 499] the representative party and Group members alike, the prosecution of the representative party’s claim is more akin to a joint enterprise in which the representative party and the Group members are engaged together with a view to maximising recovery. In such a case, it is not inappropriate for a judge to make procedural orders consummate with that paradigm.

The Court of Appeal continued by observing that this view did not turn particulars and discovery into a routine requirement in class actions employing a closed class, but rather, in the current case where it was proposed to mediate the whole class action in advance of trial, it was appropriate. The Court of Appeal then took issue with the appellant’s reading of the judgment in National Australia Bank Ltd v Pathway Investments Pty Ltd, discussed above, and rejected the existence of a principle to the effect that ‘group members ought only ever be required to give discovery if it be demonstrably necessary for the determination of a representative party’s claim’. The Court of Appeal also stated that observations to the effect that ‘discovery orders are not ordinarily made against group members unless there are compelling reasons’ would be stated too broadly if directed to all class actions. The Court of Appeal repeatedly emphasised the fact-specific nature of discretionary orders as to matters such as discovery, making judgments on such issues unlikely to be of general application. Consequently, it is suggested that the focus must be on the purpose or reason for the respondents/defendants seeking particulars and/or discovery. This will then inform whether it is appropriate or necessary to make the orders sought to ensure justice is done in the proceeding. See Michael Legg, ‘Discovery and Particulars of Group Members in Class Actions’ (2012) 36 Australian Bar Review 119. 32.60 There is particular difficulty when the court is asked to make such orders in aid of mediation, as the court cannot be told what is happening at the mediation, which makes it difficult for the parties to explain why discovery will assist a resolution of the dispute. However, there is no reason why the mediator is not able to indicate, in a way that will not breach their obligations of confidence, that such an order would assist: P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) at [32]–[35].

Hybrid Proceedings (that is, Proceeding Brought in the Normal Course and a Class Action) 32.61

The applicant in Ryan v Great Lakes Council (1997) 78 FCR 309;

149 ALR 45 brought representative proceedings as well as personal claims that concerned only two of the 12 respondents. Wilcox J considered that there may be circumstances in which it is appropriate to conduct hybrid proceedings that consolidate individual proceedings commenced in the ordinary course with representative proceedings commenced under Pt IVA. Although under s 33C a proceeding commenced against a particular respondent by way of Pt IVA is valid only where an applicant’s personal claim is shared by at least six other persons, the [page 500] legislation does not prevent the determination of related personal claims at the same time as the claims the applicant brings for the benefit of the group.

Stay on Claims 32.62 In King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 1560, Moore J considered whether: the court has power under s 33ZF to permanently stay individual claims within a group proceeding; an order for a permanent stay should be made as a matter of discretion; and a permanent stay can operate as a sanction for failure to respond to communication. Moore J stated (at [9]) that in the present case, the order resulting in the staying of an individual group member’s ‘claim’ if that group member does not reply to the compulsory questionnaire sent to them, acts as a sanction to group members. His Honour questioned whether the court has power to make such an order even accepting the width of s 33ZF. Moore J stated that even if the court does have power to direct that group members answer questions by imposing the threat of staying their claim, his Honour would not make such an order in this proceeding: at [12]. His Honour stated that

there could be a multitude of reasons why a group member in this proceeding did not answer the compulsory questionnaire, and as such the proposed sanction for not completing, signing and returning the compulsory questionnaire could operate quite unjustly. In McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947, Beach J (at [33], [41]) found that s 33ZF did not provide the power to stay one of two competing class actions and instead the court’s inherent powers would need to be relied on. This was because s 33ZF uses the language ‘… to ensure that justice is done in the proceeding …’. But a permanent stay of a group proceeding could hardly be said to ensure that justice is done ‘in the proceeding’ (Beach J’s emphasis).

• CASE LAW • 32.63

Courtney v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 (Sackville J)

The Courtney v Medtel Pty Ltd class action arose out of a hazard alert issued by the Therapeutic Goods Administration on 5 June 2000 in relation to a particular batch of St Jude Teletronic Tempo Pacemakers manufactured between March 1997 and December 1998. The alert was issued due to an increased risk that the pacemakers would experience early battery depletion and consequentially fail and cease to function without warning, and affected 1048 persons who had had a pacemaker implanted in Australia. [page 501] The applicant pleaded that the pacemaker was not reasonably fit for its purpose pursuant to Trade Practices Act 1974 (Cth) s 74B and had a ‘defect’ which had caused injury to the applicant and group members: at 171. The applicant alleged that the respondents had engaged in misleading and

deceptive conduct in contravention of Trade Practices Act s 52 and breached the duty of care owed to the applicant and the group members. 32.64 Opt-out notices had earlier been approved by Sackville J and sent to group members specifying a date by which they could opt out of the proceedings. It was later discovered that some of the notices had the second page missing, and the parties agreed that steps had to be taken pursuant to s 33ZF to remedy this error: see Darcy v Medtel Pty Ltd [2002] FCA 925. The respondents sought to send amended notices only to group members who had not opted out of the proceeding; however, the applicant argued that all group members should be sent amended notices. The respondents ultimately did not dispute sending amended notices to all group members and agreed that an opportunity would have to be provided to those who had opted out to withdraw their opt-out notice. Accordingly, Sackville J made orders under s 33ZF directing that group members who had opted out of the proceeding may withdraw their opt-out notice. Further, the applicant sought orders pursuant to s 33ZF that the respondents be prevented from putting any settlement offer to remaining group members without the prior approval of the applicant’s solicitors. The issue for the court to determine was whether the solicitor for an applicant in a representative proceeding has the right to control communications with group members even though those group members have not retained that solicitor. 32.65 Sackville J held that neither s 33ZF nor any other provision in Pt IVA prevents a respondent from communicating with (or making a settlement offer to) a group member in a manner which is not misleading or otherwise unfair. Prior approval of the court is not necessary and would give the applicant and their solicitors a role in the settlement process that was not justified by the terms of Pt IVA or the interests of justice: at [52]–[53]. However, as s 33ZF empowers the court to impose constraints on such communication to ensure justice is done in the circumstances of each case (at [54]), Sackville J accepted that the court might require a respondent proposing to make an offer of settlement directly to a group member to advise the applicant’s solicitors in advance of the terms of the offer and the

manner in which it is to be communicated. On this basis, Sackville J stated (at [69]) that he was prepared to make an order pursuant to s 33ZF: requiring the respondents to provide the applicant’s solicitors with copies of any written offers which they proposed to make to unrepresented group members; and restraining the respondents from making such offers of settlement until 21 days after that date, [page 502] but deferred making the orders to allow the respondent’s solicitors to determine if they were prepared to give undertakings in the same form.

32.66

McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1; 156 ALR 257 (Wilcox J)

The applicants in these proceedings carried on business as farmers and graziers and commenced a representative proceeding against the respondents in which they alleged that they and the group members had suffered loss due to the accumulation of a chemical (chiefly chlorfluazuron (CFZ)) in the tissues of cattle, caused by the cattle being fed cotton waste that had been sprayed with the chemical. The New South Wales Department of Agriculture had recommended cotton trash as a suitable cattle feed. In Wilcox J’s 12 June 1998 judgment (forming part of the long-running representative proceeding), his Honour dealt with whether the court ought to make an order that had the effect of ‘closing the class’ of group members. At a directions hearing on 12 March 1998, counsel for the respondents applied for an order that would, after due notice, close the class of group members. That is, it would preclude or inhibit a claim for damages by a group member who failed to identify themselves by a particular date. Counsel contended that without such an order, it would not be known when the proceeding was complete, and it would be open to group members to make a

claim many years later, by which time important evidence might have been lost. 32.67 The Federal Court Act does not confer on the court any specific power to make orders that have the effect of ‘closing the class’ of group members. However, Wilcox J stated that ‘s 33ZF(1) was intended to confer on the Court the widest possible power to do whatever is appropriate or necessary in the interests of justice being achieved in a representative proceeding’: at 4. His Honour continued that in order to avoid the necessity for parliament to frequently amend the legislation, it was desirable to empower the court by way of s 33ZF to make the orders necessary to resolve unforeseen difficulties — the only limitation being that the order must be appropriate or necessary to ensure that justice is done in the proceeding. Wilcox J concluded that an order fixing a date by which claimants must identify themselves is capable of falling within s 33ZF as ‘the criterion “justice is done” involves consideration of the position of all parties. An order preventing unfairness to a particular party may be necessary to ensure justice is done in the proceeding’: at 4. Accordingly, his Honour held that although there is no power conferred on the Federal Court by s 33Z(1)(g) to make orders closing the class of group members in representative proceedings, the court’s discretionary powers under s 33ZF(1) to make orders in the interests of justice allow it to fix a date by which claimants in the proceedings must identify themselves: at 3–4. [page 503]

32.68

King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 1560 (Moore J)

The first respondent in this case, AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd), sought to communicate with members of the representative group by seeking orders either:

requiring group members to complete a questionnaire (described as interrogatories); or sending group members a questionnaire in two parts, with failure to respond in either case resulting in the stay or dismissal of the claims of individual group members. GIO relied on s 33ZF as the source of power for the orders concerning the interrogatories. Moore J considered case law, including McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1, in which Wilcox J observed that Pt IVA is a novel procedure and is constantly evolving in line with unforeseen issues arising out of its operation. Accordingly, s 33ZF should be afforded its broadest possible construction to ensure ‘that justice is done in the proceeding’. However, it was not necessary in McMullin to consider whether an order could be made dismissing or staying individual claims in representative proceedings. The court also considered the decision of Dowsett J in Hurley v McDonald’s Australia Ltd [2001] FCA 209, where his Honour made an order which was in substance the same as that proposed by GIO in this case. 32.69 Notwithstanding the undisputed breadth of s 33ZF and the conclusion of Dowsett J in Hurley, Moore J concluded that s 33ZF does not confer upon the court the power to order a permanent stay of an individual group member’s claim: at [9]. His Honour considered that Pt IVA in substance mandates a single proceeding that the representative party prosecutes on behalf of the group. The result is that any individual claim cannot be said to have a discrete proceeding. When the word ‘claim’ is conceptualised as a collection of potential rights independent of the commencement of the proceeding, it is clear that any order staying a claim can have no legal effect while representative proceedings continue: at [10]. Moore J continued that, even if the discretion to make such an order existed, his Honour would not make such an order given that, in such a large and disparate group, there are many legitimate reasons as to why individual group members may not complete the questionnaire such that the sanction could operate unjustly: at [12]. As to the second alternative, Moore J followed Sackville J in Courtney v

Medtel Pty Ltd [2002] FCA 957, in holding that the relevant question is whether the sending of the proposed letter, due to its terms or the circumstances in which it is sent, would be ‘misleading or otherwise unfair’. Although s 33ZF(1) does not prohibit communications between the respondent and group members, it does allow the court to impose necessary restrictions on such communications to [page 504] ensure that justice is done. His Honour dismissed the applicant’s notice of motion seeking to restrain the sending of the letter but on the condition that variations be made, including an order that a permanent stay cannot operate as a sanction for failure to respond.

32.70

Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; 324 ALR 316 (Beach J)

Earglow Pty Ltd, as trustees for Boorne Super Fund Account and the Boorne Holdings Family Trust, commenced a class action in the Federal Court of Australia against Newcrest Mining Ltd. The class action alleged that in the period 13 August 2012 to 6 June 2013, Newcrest breached its continuous disclosure obligations under Corporations Act 2001 (Cth) s 674 and the prohibition on misleading and deceptive conduct in Corporations Act s 1041H in: failing to disclose to the ASX certain material information known to Newcrest in relation to expected total gold production and expected capital expenditure; and making statements that misled or deceived shareholders about profit forecasts and performance for the 2012 financial year. The common issues to be determined at the first stage of the trial included: (a) Whether Newcrest made the representations and, if made, whether they

(b) (c) (d) (e) (f)

were misleading or deceptive or likely to mislead or deceive; Whether the representations were continuing representations; Whether Newcrest had reasonable grounds for making the representations; Newcrest’s knowledge, if any, of the material information throughout the class period; Whether any or all of the material information was generally available in the market; Whether the material information was known to Newcrest and of a kind required to be disclosed during the class period.

The respondent, relying on s 33ZF, sought an order for two institutional investors, who were amongst Newcrest’s top 20 shareholders and had signed litigation funding agreements with Comprehensive Legal Funding LLC, to partake in the first stage of the trial. The respondent advanced the following submissions in support of the order: (a) Evidence of institutional shareholders will significantly impact in the determination of questions of reliance, causation and loss. Findings in the initial trial unique to the applicant’s case will be unhelpful in assessing these questions in relation to the majority of the group who are made up of institutional investors and are likely to have employed a different methodology in making investment decisions. [page 505] (b) The applicant’s individual claim alone will not adequately facilitate the adjudication of the issues and is not truly representative of Newcrest’s investors. The applicant acquired only a very small number of Newcrest shares within a very limited temporal window, in circumstances where at least 80% of Newcrest’s shareholder base was made up of institutional investors. (c) There is no principle that the initial trial in a representative action must be confined to common issues.

(d) Recent case law demonstrates that group members, particularly those who have signed litigation funding agreements, are not entitled to remain passive. Newcrest advanced the following case law examples of instances where individual group members’ claims have been adjudicated at the first stage trial (see Johnson Tiles Ltd v Esso Australia Pty Ltd & Abir (No 3) [2001] VSC 372; Woodcroft-Brown v Timbercorp Securities Ltd (in liq) 253 FLR 240; Mathews v SPI Electricity Pty Ltd (Ruling No 5) (2012) 35 VR 615; Rowe v AusNet Electricity Services (formerly SPI Electricity Pty Ltd) (S CI 2012 04538). Beach J distinguished these examples from the present case emphasising that unlike the cases advanced, the applicant had not acquiesced to the procedure put forward by Newcrest and had instead pursued a different forensic strategy. Furthermore, Beach J determined that cases presented were not analogous as they involved significant differences between individual group members in terms of liability as group members were distinguished from one another on the basis of the different legal duties owed. Beach J rejected Newcrest’s submission that, as a non-institutional investor, the applicant and its claim were not representative of the group. First, when examining the number of different shareholders rather than the percentage of shareholdings, the vast majority of the shareholders within the group were not institutional investors. Second, it is common in Australian shareholder class actions to have a retail investor as the representative party, whose individual claim is determined at the first stage. Finally, given the variations in size, client base and investment parameters, identifying and adjudicating the case of just two institutional investors would not be entirely representative of the group. Despite accepting that evidence of the role and behaviour of institutional investors will generally be relevant in determining the common issues, Beach J held that such evidence was not therefore automatically ‘necessary’. Beach J held that questions of evidence and forensic strategy are matters to be determined by the applicant and that s 33ZF does not exist as a coercive power to compel the applicant to file evidence that may be necessary to support its claim.

Beach J accepted that the orders sought would not give rise to significant practical impediments nor cause excessive costs or delay. Notwithstanding this position, Beach J concluded that the class action regime in the Federal Court Act did not command such an intrusive role and was of the opinion that the circumstances did not justify ‘stretching modern case management to such an extent as to endorse some Continental idea of in effect coercing a party to file evidence of a particular type against its wishes’. [page 506]

32.71

Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; 338 ALR 188; [2016] FCAFC 148 (Murphy, Gleeson and Beach JJ)

Money Max Int Pty Ltd (the applicant) commenced an open class action against QBE Insurance Group Ltd (QBE) in relation to allegations of noncompliance with the continuous disclosure regime in Corporations Act 2001 (Cth) Ch 6CA and misleading or deceptive conduct in breach of Corporations Act ss 1041E and 1041H, Australian Securities and Investments Commission Act 2001 (Cth) s 12DA, and/or Australian Consumer Law s 18 in Competition and Consumer Act 2010 (Cth) Sch 2. The litigation was funded by International Litigation Funding Partners Pte Ltd (the funder). The funding agreement provided that the funder would meet the legal costs, any adverse costs order and any security for costs for the funded group members. In return, the funded group members agreed that from any settlement or judgment moneys they received they would reimburse the funder the legal costs paid and pay the funder a percentage commission of either 32.5% or 35%. To be a funded group member a group member would need to enter into contractual relations with the funder. The applicant (not the funder) then sought orders pursuant to Federal Court Act ss 22 and 33ZF, with the effect of extending the litigation funding terms to all group members. The orders included requiring the applicant and

all group members to pay the funder a pro rata share of the legal costs incurred and a funding commission at a reduced rate of 30% from any settlement or judgment in their favour. The Full Court determined that it would make orders, but not precisely the same as those sought by the applicant. The Full Court stated that upon the funder, the applicant and the applicant’s solicitor giving an undertaking to each other and to the court that they would comply with funding terms set out in annexure A to the judgment (a litigation funding agreement that set out the obligations and rights of the entities involved in the class action but with the payment to the funder to be determined by the court), the court would order that prior to any distribution to group members the following amounts be deducted from any settlement or judgment and paid to the funder: (a) the legal costs incurred by the lawyers and paid by the funder; and (b) a percentage of any settlement or judgment to be determined by the court. However, no amount payable pursuant to the order could be greater than would be payable if the order was not made; that is, the terms of the funding agreement applied. [page 507]

32.72

Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98 (Jagot, Yates and Murphy JJ)

In Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296, the applicant commenced a closed shareholder class action against Treasury Wine Estates Limited. The group definition was subsequently amended to create an open class action. The parties were engaged in preparing for the initial trial which was due to commence on 28 August 2017 and were also planning to conduct

a mediation of the dispute in June 2017. The parties agreed that a combined opt-out and group member registration notice (group notice) should be issued in relation to the proceeding, including the making of some form of ‘class closure’ order. However, the parties disagreed as to the form of the proposed group notice and the form of class closure. In relation to the latter, TWE sought orders that would close the class for all purposes such that, even if settlement was not achieved, group members who neither opted out nor registered were precluded from sharing in the fruits of any favourable judgment that was later given. Mr Jones opposed such orders and argued that the court had no power to extinguish the rights of group members in that regard, and that as a matter of discretion the court should not do so. Foster J made orders in keeping with those sought by Mr Jones, namely: 10. Subject to Order 12 below, pursuant to s 33ZF of the Act, any group member who wishes to participate in any distribution of any amount agreed in a settlement of this proceeding be obliged, by the Class Deadline, to complete an online TWE Group Member Registration Form at the domain hosted by IMF Bentham Limited www.tweclassaction.com.au (Registration Form). 11. In completing the Registration Form, and in order to register for the purpose of Order 10 above, each group member (other than those who are deemed to have registered by Order 12 below) be required to submit: (a) The group member’s name, address and email address; (b) Any relevant and available Holder Identification Number (HIN) or Security Reference Number (SRN); (c) The number of Treasury Wine Estates Limited securities (TWE securities) held by the group member immediately prior to the commencement of trade on 17 August 2012; (d) For each purchase by the group member of TWE securities during the period from 17 August 2012 to the date of submission of the Registration Form, all transactional information regarding the purchase, including in respect of each such purchase: (i) The date of purchase; (ii) The quantity of securities purchased; and (iii) The consideration paid (including brokerage); and

[page 508] (e) For each sale by the group member of TWE securities during the period from 17 August 2012 to the date of submission of the Registration Form, all transactional information

regarding the sale, including in respect of each such sale: (i) The date of sale; (ii) The quantity of securities sold; and (iii) The consideration received (net of brokerage). 12. A group member be deemed to have complied with Order 10 above if, by 29 March 2017, the group member has: (a) Engaged the plaintiff’s solicitors in writing to act for that group member in connection with this proceeding; and/or (b) Retained IMF Bentham Limited in writing to provide litigation funding services to that group member in connection with this proceeding. 13. Group members who are deemed to have registered by the operation of Order 12 above be required to submit to IMF Bentham Limited as soon as practicable but, in any event, by no later than 26 May 2017, and to the extent that they have not already done so, the same information as other group members are required to submit to IMF Bentham Limited pursuant to Order 11(a) to (e) above. … 15. Pursuant to s 33ZF of the Act, any group member who does not opt out and who is not a Registered Group Member: (a) Remain a group member for all purposes, including for the purpose of being bound by any judgment in this proceeding and being entitled to participate in any award of damages by the Court if this proceeding does not settle; but (b) Subject to any further order of the Court, will not be entitled to receive a distribution from any settlement of this proceeding.

The judgment was appealed to the Full Court of the Federal Court of Australia which refused leave to appeal. While the Full Court did not need to expressly address the novel class closure order, it chose to provide guidance as it considered class closure to be an important part of class action procedure: at [70]. The Full Court effectively confirmed Foster J’s orders, stating that it agreed with his Honour’s remarks in relation to the exercise of the discretion, including: ‘There is no good reason to shut out unregistered group members now if the case does not settle and goes to trial and is ultimately determined by the Court. Those group members who do not opt out as part of the opt out process addressed by these Reasons should retain all of their rights at least until judgment on liability’: at [71]. The Full Court also found that there was power to make a class closure

[page 509] order relying on s 33ZF but the court should be cautious before making a class closure order that, in the event settlement is not achieved, operates to lock class members out of their entitlement to make a claim and share in a judgment. In short: ‘the facilitation of settlement is a good reason for a class closure order but, if settlement is not achieved, an order to shut out class members who do not respond to an arbitrary deadline is not’: at [76].

[page 511]

CHAPTER 33 Group Member Costs (s 43(1A) (Cth), s 33ZD (Vic), s 181 (NSW), s 103ZB (Qld)); Saving of Rights, Powers etc (s 33ZG) • OVERVIEW • Section 43(1A) and equivalent provisions in Victoria, New South Wales and Queensland deal with liability for costs in representative proceedings. While those provisions make it clear that costs may not be awarded against group members, the position of security for costs and group members’ potential liability to contribute to the cost of pursuing a representative proceeding (particularly in funded claims) is more complex. In the Federal Court, s 33ZG preserves the court’s various rights and powers under provisions of the Federal Court of Australia Act 1976 (Cth) and the Federal Court Rules.

• LEGISLATION • Section 43(1A), Federal Court of Australia Act 1976 (Cth) In a representative proceeding commenced under Part IVA or a proceeding of a representative character commenced under any other Act that authorises the commencement of a proceeding of that character, the Court or Judge may not award costs against a person on whose behalf the

proceeding has been commenced (other than a party to the proceeding who is representing such a person) except as authorised by: (a) in the case of a representative proceeding commenced under Part IVA — section 33Q or 33R; or (b) in the case of a proceeding of a representative character commenced under another Act — any provision in that Act.

[page 512]

Section 33ZD, Supreme Court Act 1986 (Vic) In a group proceeding, the Court— (a) may order the plaintiff or the defendant to pay costs; (b) except as authorised by section 33Q or 33R, may not order a group member or a sub-group member to pay costs.

Section 181, Civil Procedure Act 2005 (NSW) Despite section 98, in any representative proceedings, the Court may not award costs against a person on whose behalf the proceedings have been commenced (other than a representative party) except as authorised by sections 168 and 169.

Section 103ZB, Civil Proceedings Act 2011 (Qld) Costs In a representative proceeding, the court—

(a) may order a party to pay costs; but (b) may not order a group member who is not a representative party to pay costs, other than under section 103M or 103N.

Section 33ZG, Federal Court of Australia Act 1976 (Cth) Except as otherwise provided by this Part, nothing in this Part affects: (a) the commencement or continuance of any action of a representative character commenced otherwise than under this Part; or (b) the Court’s powers under provisions other than this Part, for example, its powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court; or (c) the operation of any law relating to: (i) vexatious litigants (however described); or (ii) proceedings of a representative character; or (iii) joinder of parties; or (iv) consolidation of proceedings; or (v) security for costs.

[page 513]

• COMMENTARY • Security for Costs 33.1 More than any other discussion in relation to this section, there has been much judicial discussion of the issues of security for costs and its relationship with s 43(1A). In the draft bill annexed to the Australian Law Reform Commission,

Report No 46 ‘Grouped Proceedings in the Federal Court’ cl 31(2) states: In a group member’s proceeding, an order for security for costs may not be made against the principal applicant on the ground that the proceeding is for the benefit of the group member and not for the benefit of the principal applicant.

The Explanatory Memorandum for the draft bill stated (at [74]): Subclause 31(2) prevents the operation of the rule that security for costs may be ordered if a person is conducting proceedings not for his or her own benefit but for the benefit of another person. It ensures that an order for security for costs cannot be made on that ground alone.

However, in drafting Pt IVA the legislature departed from this suggestion — no such limitation on security for costs was included. The history of the debate about security for costs was neatly summarised in Capic v Ford Motor Co (No 2) [2016] FCA 1178. In relation to an application for security for costs, the court noted that (at [8]): … it was once thought that individual group members ought not generally be ordered to put up security. This view rested upon s 43(1A) of the Federal Court of Australia Act 1976 (Cth) (‘the FCA Act’), which provides that, subject to two presently irrelevant exceptions, a group member may not be ordered to pay costs. If a person may not be ordered to pay costs, so goes the reasoning, how can they be ordered to put up security for those costs? … However, a different view has come to prevail. It rests in part on s 33ZG of the FCA Act … Section 33ZG appears to be saying that Part IVA has no impact on the law relating to security for costs. On its face, this may appear to be a good reason to think that security should still be available from class members despite s 43(1A). One difficulty with that view might be, however, that s 43(1A) is not contained in Part IVA at all, but instead in Part VI, which is entitled ‘General’ (a point made by Lindgren J in Ryan). Section 43 is in fact the general costs provision in the FCA Act. For myself, and uninstructed by more recent authority, I would have thought that s 33ZG does not, indeed cannot, say anything about s 43(1A) since it is not in Part IVA. They pass like ships in the night. And, if that be so, it would appear quite open to argue that if one cannot order costs against a group member, then one ought not to be able to

[page 514] make an order whose substantive effect is to require group members to put up security. A weaker version of the argument might be that it is at least a very significant discretionary consideration. However, like the Mary Rose this ship has sailed. In Bray v F Hoffmann-La Roche Ltd (2003)

130 FCR 317, the Full Court was confronted with a class action concerned with alleged price fixing in the vitamins market. Some of the class members — like Ms Bray — were individuals, but many were large entities located at various points along the vitamin supply chain. Ms Bray was not able to put up security, although there was no suggestion that she had been put up as a ‘straw woman’. The critical feature in the case appears to be that the Full Court apprehended that there were large entities (i.e. retailers and so on) standing behind Ms Bray that could afford to put up security for costs. The Court was unanimous in that context in concluding that s 43(1A) did not have the effect of preventing security from being ordered. The principle was recently reaffirmed by the Full Court in Madgwick v Kelly (2013) 212 FCR 1 at [6]. It was nevertheless held in that case that it was still legitimate to take into account in assessing whether to order security the fact that costs could not, by dint of s 43(1A), be ordered against an individual class member (at [6]). The outcome of these two decisions is that the fact that costs may not be awarded against class members is a relevant matter to be taken into account, but does not necessarily provide a basis for refusing an application for security for costs.

33.2 As explained in Capic, decisions in the Federal Court initially determined that the immunity from an order of costs in s 43(1A) would be undermined if security for costs was awarded (relying on s 33ZG). In Woodhouse v McPhee (1997) 80 FCR 529, Merkel J considered a motion for security for costs. In dismissing the application for security for costs he considered that the fact that proceedings were brought ‘for the benefit of others’ was relevant. He stated (at 533): … there is no reason why, in general, the fact that a proceeding is brought for the benefit of others under Pt IVA ought not to be a consideration which together with other considerations can favour the ordering of security. Indeed, s 33ZG(c)(v) provides that, except as otherwise provided by Pt IVA, nothing in the Part affects the operation of any law relating to security for costs. Consequently nothing in Pt IVA is to affect the operation of s 56 and O 28 in relation to security for costs or is to impede orders being made for security for costs in Pt IVA cases on the same basis as may be ordered in other cases. On the other hand it would be incongruous and anomalous for Parliament specially to confer a direct costs immunity under s 43(1A), inter alia to afford represented persons greater access to justice, and then for the courts indirectly to remove the effect of that immunity by making orders for security for costs on the basis that the applicant is bringing the proceedings for the benefit of others who ought to bear their share of the potential costs liability to other parties. In my view, in order to deal with that incongruity and anomaly the

[page 515] fact that an impecunious applicant is bringing a Part IVA proceeding for the benefit of

represented persons, whilst a relevant consideration in favour of granting security, ought not of itself be as significant a consideration as it might otherwise be in favour of the granting of security.

Additionally, Merkel J stated that there were a number of additional considerations operating against the making of an order for security for costs in that instance (at 534): the individual applicant has a bona fide claim and has a reasonably arguable case for relief under Pt IVA of the Act in a matter which raises important issues of principle in relation to the rights of former employees of a company in liquidation; public policy considerations weigh strongly against any order for security that might impede a group claim for accrued employee entitlements brought against directors on the basis of their liability for insolvent trading by their company; an order for security is likely to stultify proceedings unless the security is obtained from the represented parties.

Merkel J concluded by stating that if the applicant’s claim was ‘spurious, oppressive or clearly disproportionate to the costs involved in pursuing it or if the proceedings were structured so as to immunise persons of substance from costs orders’, then those factors would weigh in favour of awarding security for costs. 33.3 A number of subsequent decisions followed the reasoning in Woodhouse: see, for example, Ryan v Great Lakes Council (1998) 155 ALR 447; Tobacco Control Coalition Inc v Philip Morris (Aust) Ltd [2000] FCA 1004. In Ryan v Great Lakes Council, Lindgren J stated (at 454) that the: … proposition that it is contrary to the spirit of s 43(1A) that the individuals constituting the group members be compelled to contribute to a fund to enable their impecunious representative party to satisfy an award of costs against him, is not attended by sufficient doubt to warrant reconsideration at appellate level.

However, given subsequent decisions, it is clear that (at least in the Federal Court) security for costs can be ordered against group members. In the first instance decision of Bray v F Hoffman-La Roche [2002] FCA 1405, Merkel J affirmed his decision in Woodhouse. However, on appeal (Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317; 200 ALR 607; [2003] FCAFC 153), the Full Court held that there was no overlap between ss

33ZG(c)(v) and 43(1A) and that an order for security did not affect the immunity of s 43(1A). Finkelstein J stated (at [250]–[251]): The effect of [s 33ZG(v)] is to ensure that an application for security for costs is not confronted with any special hurdle based on the type of proceeding (a group

[page 516] proceeding) in which it is made. The effect of [Federal Court Act s 43(1A)] is to protect represented parties in relation to any costs order which may be made in the action. There is no overlap between the two sections. The judge was of the opinion that the effect of s 43(1A) would be undermined if a security order was made. The judge said it would be ‘incongruous and anomalous’ to make an order for security in light of s 43(1A). But if it be correct that the two sections operate independently of one another, there can be no such incongruity or anomaly. This is not to say that the fact that a proceeding is a group proceeding is irrelevant to the question whether security should be granted. To the contrary, the character of such a proceeding sometimes gives rise to features not found in ordinary civil litigation which may go against or in favour of the provision of security. What follows is not intended to be an exhaustive list of these features, but they are some of the ones.

33.4 The issue was considered by the Full Court in Madgwick v Kelly (2013) 212 FCR 1; 299 ALR 188; [2013] FCAFC 61, where the court made clear that security for costs applications are not prohibited in representative proceedings. At first instance, the respondents sought an order for security for costs, and that application was refused. They sought to appeal the decision. In allowing the appeal, Allsop CJ and Middleton J considered the dichotomy between ss 43(1A) and 33ZG(c)(v). They found that the primary judge had failed to follow the decision in Bray v Hoffman-La Roche, which made clear that ‘an order for security did not affect the immunity of s 43(1A) and there was no overlap between ss 43(1A) and 33ZG(c)(v), which operate independently’: at [39]. The Full Court held that those standing to benefit from the litigation should make a real, but not oppressive, contribution to a fund to secure the costs of the respondents: at [99]–[100], [185]. Accordingly, Allsop CJ and Middleton J granted leave, allowed the appeal, and ordered that ‘security be

provided, in amounts and on terms to be determined by the primary judge on remitter’: at [2]. On remitter (Kelly v Willmott Forests Ltd (in liq) (No 2) [2013] FCA 732), Murphy J held (at [39]) that following a case management conference between the parties, his Honour proposed to make orders that the solicitors for the applicants write to each of the group members informing them that: (a) the court intends to fix security for costs to be paid by the applicants and group members in the sum of $6.58 million, to be paid in three stages; (b) the security has been set by reference to the likely financial capacity of the group members who stand to benefit from the proceedings if successful; and (c) if the security for costs ordered is not paid, it is likely that the court will stay the proceedings. However, that was not the end of the matter. Before making any order requiring security, Murphy J directed the applicant’s solicitors to write to all group members advising them of the quantum of security to be ordered, its staging, the likelihood that the proceedings would be stayed if security was not provided, and requesting [page 517] a contribution from each group member or the reason for their refusal. That information was sought in memorandums distributed to the group members. In Kelly v Willmott Forests Ltd (in liq) (No 3) [2014] FCA 78, Murphy J outlined the response to the memorandums, noting that approximately 89% of the unknown group members and 18% of the known group members failed to respond: at [40]–[42]. Those who did respond pledged to provide security in the amount of $1,798,582, comprised of $1,700,367 pledged by known group members and $98,214.00 from unknown group members: at [49]. However, the contributions fell short of the pledged amounts, such that only $1.73 million was available for security: at [50].

Murphy J observed (at [68]): … a significant majority of the known and unknown group members that refused to contribute to security did so because they were financially unable, or reasonably unwilling, to contribute.

Murphy J determined (at [86]–[87]): While I have ordered some further steps to be taken, I doubt that substantial further contributions will be made by the group members, and M and K has not presently received all of the $1.73 million pledged. Leaving aside the fruits of the further steps I have ordered, I consider it likely that if security of more than $1.73 million is ordered then the applicants will be unable to provide it. The claims of the applicants and in the order of 500 group members will stultify even though they have made a real contribution to security, or were financially unable or reasonably unwilling to do so. In my view a real injustice will be done to those applicants and group members who: (a) have contributed to security; or (b) (taking a broad view) are financially unable or reasonably unwilling to do so; if I were to presently order security greater than $1.73 million.

Murphy J observed that if security for costs is to be assessed by reference to the failure of unidentified group members to respond, then it will be very difficult, perhaps impossible, for an applicant to avoid the action being stayed. He considered that to balance the respondents’ legitimate concern to obtain some security for costs against the risk of stultifying the proceedings, the better approach was to winnow the class down. He therefore made orders which had the effect of reducing the size of the class by: ordering the opt-out process to occur; reducing the class by excluding those group members who refuse to respond to the requests for security; and [page 518] reducing the class by excluding those group members who do not make a contribution to security or have not shown an inability, or reasonable unwillingness, to contribute to security.

The final two steps were to be achieved by way of class closure orders: see [90]–[96]. In New South Wales, a similar approach has been adopted: see De Jong v Carnival PLC [2016] NSWSC 347, where notices were sent out to determine group members’ willingness to pay security.

Security for Costs — Factors to Consider 33.5 The essential question for the court is to determine whether, in any particular case, ordering group members to provide security for costs will have the effect of ‘stifling’ the case: see Capic v Ford Motor Co (No 2) [2016] FCA 1178 at [14]. Each case will turn on its particular circumstances but established relevant considerations were set out in Kelly v Willmott Forests Ltd (in liq) (2012) 300 ALR 675; [2012] FCA 1446 at [13]; Madgwick v Kelly (2013) 212 FCR 1; 299 ALR 188; [2013] FCAFC 61 at [7] as follows: Whether there is reason to believe that the applicants will be unable to pay the respondents’ costs if so ordered, that is, whether the applicants are impecunious? Whether the applicants’ insufficiency of means is caused by the conduct which is the foundation for the action? The promptness of the application and the stage of the proceedings at which an application for security is brought. Whether the proceeding has become bogged down with ‘interminable and expensive interlocutory applications’ for which the applicants bear responsibility? The strength and bona fides of the applicants’ claim for relief from the respondents. Whether the applicants have been deliberately selected as ‘persons of straw’, in order to immunise from costs orders group members of substantial means? Whether the proceeding is essentially defensive in nature? Whether the applicants are suing for someone else’s benefit?

The characteristics of the group members. For example do they include corporations or natural persons, and are they rich or poor? Whether someone who stands to benefit from the litigation is funding the applicants? However, this does not include lawyers acting on a conditional fee arrangement: Madgwick v Kelly (2013) 212 FCR 1 at [43]–[48]. Whether security would have been ordered if separate actions had been brought by the group members? Whether an order for security would stifle the action and shut the applicants out from pursuing an arguable claim? Relevant to the likelihood of stultification is: [page 519] (i) the characteristics of the group including whether they are unidentified, their financial position, their willingness to contribute to security: Bray v F Hoffman-La Roche Ltd (2003) 200 ALR 607 at [252]; Madgwick v Kelly (2013) 212 FCR 1 at [81]–[83]; (ii) the impact on whether representative proceedings can be pursued not just the pursuit of the individual’s rights: Madgwick v Kelly (2013) 212 FCR 1 at [90]–[92]; (iii) the availability of litigation funding and on what particular terms (bearing in mind that a funder will take a proportion of any recovery): Madgwick v Kelly (2013) 212 FCR 1 at [76]–[78].

See also De Jong v Carnival PLC [2016] NSWSC 347 at [26], where BeechJones J articulated five propositions citing various authorities. However, it must be recalled that the guiding touchstone is fairness — fairness as to whether security should be ordered and, also, importantly, in what amount: Madgwick v Kelly (2013) 212 FCR 1 at [92].

After The Event (ATE) Insurance 33.6 ATE insurance covers adverse costs orders in the event that a party is unsuccessful in litigation. Unlike traditional insurance which is taken out ahead of an event occurring, ATE insurance is available once a litigant is involved in, or contemplating, a legal claim. See Callery v Gray [2001] 3 All ER 833 at 837. In Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd [2017]

FCA 699 (Petersen), the respondents sought orders requiring the applicant to provide security for their costs of the proceeding. The applicant proposed security in the form of an ATE policy underwritten by AmTrust Europe which indemnified the applicant for defence costs up to $5.5 million (the AmTrust Policy). Yates J was persuaded that, depending on the circumstances of the given case, an appropriately worded ATE policy might be capable of providing sufficient security for an opponent’s costs. However, his Honour concluded that the specific policy in question in Petersen, the AmTrust Policy, did not provide sufficient security in this instance. In reaching this conclusion, the key considerations taken into account by his Honour included the following: (a) The applicant is the insured party under the AmTrust Policy and there is no mechanism by which the respondents can compel the applicant to sue on the policy. Further, the applicant’s impecuniosity may mean it could not afford to sue on the policy. (b) Following the hearing but prior to judgment being handed down, the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the CL(TPCAI) Act) was enacted. In short, the effect of the CL(TPCAI) Act is that, with leave of the court, a third party may bring proceedings in a court in New South Wales directly against an insurer in respect of an insured liability owed by the insured to the third party. Yates J noted that there are [page 520] a number of difficulties and potential obstacles to the respondents utilising the CL(TPCAI) Act, including needing to sue a foreign defendant with no presence in Australia and the defendant being entitled to rely on any defence open to it under the AmTrust Policy. In summary, his Honour found that in proceedings based on the CL(TPCAI) Act, the respondents would be in no better position, and in some respects may even be in a materially worse position, than the

(c)

(d)

(e)

(f)

(g)

applicant would be in if the applicant were to sue AmTrust Europe on the AmTrust Policy. Under the policy, AmTrust is entitled to reduce its liability or cancel the policy on the basis of non-fraudulent non-disclosure. This was taken into consideration in circumstances where the basis upon which the policy was obtained was not disclosed to the respondents. The AmTrust Policy contains a significant number of exclusions from liability and other conditions affecting the applicant’s legal entitlements under the policy. The respondents have no control over how the applicant might choose to act under the contract of insurance or conduct its case. Further, Yates J noted that the exclusions from liability under the AmTrust Policy appear to be more extensive and onerous than those described in the ATE Policies accepted as adequate security in the United Kingdom cases. It is possible that the AmTrust Policy could be cancelled before a costs order is made against the applicant and therefore before a legal liability arises to which the AmTrust Policy can respond. It is uncertain whether the proceeds of payment under the AmTrust Policy would be available to the respondents if the applicant was to be put into liquidation or whether the proceeds would form part of the body of assets available to creditors generally. Certain obligations under the AmTrust Policy may interfere with the obligation imposed on the applicant and the applicant’s lawyers under the Federal Court Act to conduct the proceedings in a manner which is consistent with the overarching purpose of facilitating the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.

In light of the above, Yates J ordered that security be provided by way of payment into court or bank guarantee from an Australian trading bank.

No Security Against Group Members in Victoria 33.7 The position in Victoria appears to be different. In Matthews v SPI Electricity Pty Ltd (No 9) [2013] VSC 671, which was

heard in the Supreme Court of Victoria several months after Madgwick and Kelly were decided by the Federal Court, an application for security for costs was made in a group proceeding in which Mrs Matthews, as representative plaintiff, was bringing claims against SPI Electricity and others for damages for personal injuries, property damage and economic loss suffered as a result of the Black Saturday bushfire in Kilmore East. [page 521] The application for security was made against both the plaintiff and the insurers of group members. The court considered Bray and Woodhouse, and found that despite the limited Victorian authority directly supporting the power to order security for costs, the width and purpose of the power conferred by s 33ZD extended to enabling the Supreme Court of Victoria to order security for costs in appropriate cases: at [84]. 33.8 However, the court highlighted an important distinction between the provisions in the Federal Court Act and the Victorian Supreme Court Act. Federal Court Act s 33ZG(c)(v) expressly preserves the court’s power to order security for costs. No such provision is found in Victorian Supreme Court Act s 33ZD. Accordingly, the court found that s 33ZD(b) denies the court power to order security against group members: at [162]; see also [54]– [55].

Security for Costs Against Group Members in New South Wales (and Queensland?) 33.9 The New South Wales and Queensland provisions also do not have an equivalent provision to Federal Court Act s 33ZG(c)(v). However, at least in New South Wales, it has been held that the absence of a similar provision, while prohibiting security to be ordered against group members, does not preclude the ordering of security against the

representative party which may need to be satisfied by the group members. In other words, while the mechanism may differ, the practical effect is the same. In De Jong v Carnival PLC [2016] NSWSC 347, Beech-Jones J concluded (at [6]): For the reasons that follow, I conclude that this Court has the power to order security for costs against the representative party in representative proceedings, but not against group members. I also find that it can stay the proceedings in the event that security is not provided, although the Court might order that the proceedings no longer continue as representative proceedings before ordering a stay. The power to order security for costs is to be exercised in the manner stated by Carr J in Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 (‘Bray’) at [141] namely by balancing the policy reflected in s 181 of the CPA against the risk of injustice to a defendant. In circumstances where the representative party is impecunious, but is neither suing on behalf of a person with assets who seeks to avoid a costs liability nor supported by an external funder, then a determination of whether security will be ordered and, in particular, whether an order for security will stifle the proceedings requires that consideration be given to the financial circumstances of group members. If a reasonably strong case for security is made out then it may, and often will, be appropriate to ascertain the capacity and willingness of group members to contribute to a fund to meet any order for security that is made against the representative party.

[page 522] In that case, Beech-Jones J held that the contention that an order for security will stifle the case proceedings had not been made out because little was known about the capacity and willingness of group members to contribute to a fund to meet any order for security. His Honour ordered that information be included in the opt-out form to ascertain the capacity and willingness of group members to contribute to a pool of funds to satisfy an order for security. There are no decided cases in Queensland to date.

Sample Group Members and Costs 33.10 In some representative proceedings, evidence is given by ‘sample group members’. These are group members who are not a sub-group representative party but give evidence in the proceedings. Questions have

arisen about whether those sample group members should face potential cost consequences. In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212, Gillard J stated (at [100]) that the section operates to confine the costs to a cost order involving the parties, and not the others in a group proceeding in the absence of a special order. It was held that the circumstances in which a group member could be ordered to pay costs were limited to those provided for in ss 33Q and 33R, neither of which applied to sample group members as deployed in the proceeding. 33.11 The Victorian position with regard to sample group members was considered in Matthews v SPI Electricity Pty Ltd (Ruling No 5) (2012) 35 VR 615, which involved a class action arising out of the Black Saturday bushfires in Victoria. Before the trial began, the court was asked to provide a ruling regarding the potential liability for costs of sample group members. The court stated that it was not an unusual request (at [34], [44]): Those group members contemplating engaging in the process should know … whether they have a potential liability for costs. They should not be left in the dark … Mrs Matthews knows that if her claim fails then she will be at risk of the application of the general rule that costs follow the event, absent special circumstances. Why, I ask rhetorically, should the group members not know whether they are exposed to similar cost consequences? This is particularly so when absent their participation in the trial the group members are protected by s 33ZD(b). … … I am satisfied that I have the power to make the ruling sought and propose to declare that the sample group members have no liability to pay the costs of the defendants in relation to the trial in the event of a claim brought by one or other of them failing. This conclusion does not, however, affect Mrs Matthews’ potential liability under s 33ZD(a) to the defendants for costs, which may include those of a failed claim by a sample group member.

[page 523]

Proceedings of a Representative Character 33.12 Section 33ZG provides for the preservation of representative procedures other than Federal Court Act Pt IVA.

Federal Court Rules 2011 (Cth) Div 9.2 addresses representative proceedings: 9.21 (1) A proceeding may be started and continued by or against one or more persons who have the same interest in the proceeding, as representing all or some of the persons who have the same interest and could have been parties to the proceeding. (2) The applicant may apply to the Court for an order appointing one or more of the respondents or other persons to represent all or some of the persons against whom the proceeding is brought. (3) If the Court makes an order appointing a person who is not a respondent, the order has the effect of joining the person as a respondent to the proceeding. (4) This rule does not apply to a proceeding dealing with property that is subject to a trust or included in a deceased estate. 9.22 (1) An order made in a proceeding for or against a representative party is binding on each person represented by the representative party. (2) However, the order can be enforced against a person who is not a party only if the Court gives leave. (3) An application for leave under subrule (2) must be served personally on the person against whom it is sought to enforce the order. (4) A person who is served with a notice under subrule (3) may dispute liability to have the order to which the notice relates enforced against the person on the ground that facts and matters particular to the person entitle the person to be exempt from liability.

33.13 Division 9.2 is modelled on Federal Court Rules 1979 (Cth) O 6 r 13, which have their historical origins in Chancellery Court practice in the United Kingdom. Similar provisions have been criticised for not addressing the numerous issues that arise in representative proceedings and which are dealt with by Pt IVA: see, for example, Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 388, 390; Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 258; Michael Legg, Vanessa McBride and S Stuart Clark, ‘The New South Wales Representative Proceeding: A Class Action Half-Way House’ (2008) 12 UWS Law Review 176. One key difference between Div 9.2 and O 6 r 13 is that the discretionary element allowing for the court to discontinue

[page 524] the proceeding in its representative form (‘unless the Court otherwise orders’) has been omitted: see Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 405, 415, 427; 127 ALR 76 (dealing with the equivalent rule in the Supreme Court of New South Wales’ former court rules). 33.14 Other more specialised provisions exist in other federal legislation. For example, the Competition and Consumer Act 2011 (Cth) provides at s 87: (1A) Without limiting the generality of sections 51ADB and 80, the Court may: … (b) on the application of the Commission in accordance with subsection (1B) on behalf of one or more persons who have suffered, or who are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IV (other than section 45D or 45E) or Division 2 of Part IVB; or … make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will: (c) compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or (d) prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person. (1B) The Commission may make an application under paragraph (1A)(b) on behalf of one or more persons identified in the application who: (a) have suffered, or are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IV (other than section 45D or 45E) or Division 2 of Part IVB; and (b) have, before the application is made, consented in writing to the making of the application.

33.15 Similarly, the Australian Securities and Investments Commission Act 2001 (Cth) provides at s 50:

Where, as a result of an investigation or from a record of an examination (being an investigation or examination conducted under this Part), it appears to ASIC to be in the public interest for a person to begin and carry on a proceeding for:

[page 525] (a) the recovery of damages for fraud, negligence, default, breach of duty, or other misconduct, committed in connection with a matter to which the investigation or examination related; or (b) recovery of property of the person; ASIC: (c) if the person is a company—may cause; or (d) otherwise—may, with the person’s written consent, cause; such a proceeding to be begun and carried on in the person’s name.

The Australian Securities and Investments Commission has sought to combine s 50 and Pt IVA. However, in proceedings against KPMG over the auditing of various companies in the Westpoint Group this led to KPMG commencing a constitutional challenge in the High Court of Australia relying on Australian Constitution s 51(xxxi). The matter settled. See Michael Legg and Nicholas Mavrakis, ‘ASIC — The Latest Litigation Funder?’ (2010) 9(4) Financial Services Newsletter 62.

Other Jurisdictions 33.16 There is no section comparable to Federal Court Act s 33ZG in the New South Wales, Victorian and Queensland legislation. 33.17

Section 33ZG operates to preserve various rights and powers:

(a) concerning claims in which no reasonable cause of action is disclosed, or that is oppressive, vexatious, frivolous or an abuse of process of the court; (b) conferred by any law in relation to vexatious litigations, other forms of

representative proceedings, joinder of parties, consolidation of proceedings or security for costs; and (c) with respect to proceedings ‘of a representative character’ brought other than under Federal Court Act Pt IVA. The Explanatory Memorandum to the Federal Court of Australia Amendment Bill 1991 states (at [51]–[53]): This section reflects the fact that while the new Part provides a new procedure for bringing and conducting a representative proceeding, it does not change existing laws that apply generally to proceedings in the Federal Court unless those changes are provided for in Part IVA. The section makes it clear that the new Part does not affect the commencement or continuance of any other representative action in the Court, for example, under the Trade Practices Act 1974 or under the Court’s current representative action procedure.

[page 526] The section makes special mention of the Court’s powers relating to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court — all of which are explicitly preserved.

33.18 Section 33ZG(b) makes it clear that the court’s powers and existing rules, stemming from sources other than in Pt IVA, apply to representative proceedings commenced under Pt IVA. Sackville J in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229 at [47] observed: Section 33ZG(b) is obviously a reference to the powers conferred by the Federal Court Rules (FCR). FCR O 11, r 16, for example, confers powers on the court to strike out the whole or any part of a pleading on the ground that it discloses no reasonable cause of action, has a tendency to cause prejudice or embarrassment or delay in the proceeding, or is otherwise an abuse of process. The court also has power to stay or dismiss a proceeding where it appears that no reasonable cause of action is disclosed, the proceeding is frivolous or vexatious or is an abuse of process: FCR O 20, r 2.

There is no equivalent provision in the Victorian or New South Wales legislation.

• CASE LAW • 33.19

Capic v Ford Motor Co (No 2) [2016] FCA 1178 (Perram J)

The history of the debate about security for costs was neatly summarised in Capic v Ford Motor Co (No 2) [2016] FCA 1178. In relation to an application for security for costs, the court noted that (at [8]): … it was once thought that individual group members ought not generally be ordered to put up security. This view rested upon s 43(1A) of the Federal Court of Australia Act 1976 (Cth) (‘the FCA Act’), which provides that, subject to two presently irrelevant exceptions, a group member may not be ordered to pay costs. If a person may not be ordered to pay costs, so goes the reasoning, how can they be ordered to put up security for those costs? … However, a different view has come to prevail. It rests in part on s 33ZG of the FCA Act … Section 33ZG appears to be saying that Part IVA has no impact on the law relating to security for costs. On its face, this may appear to be a good reason to think that security should still be available from class members despite s 43(1A). One difficulty with that view might be, however, that s 43(1A) is not contained in Part IVA at all, but instead in Part VI, which is entitled ‘General’ (a point made by Lindgren J in Ryan). Section 43 is in fact the general costs provision in the FCA Act. For myself, and uninstructed by more recent authority, I would have thought that s 33ZG does not, indeed cannot,

[page 527] say anything about s 43(1A) since it is not in Part IVA. They pass like ships in the night. And, if that be so, it would appear quite open to argue that if one cannot order costs against a group member, then one ought not to be able to make an order whose substantive effect is to require group members to put up security. A weaker version of the argument might be that it is at least a very significant discretionary consideration. However, like the Mary Rose this ship has sailed. In Bray v F Hoffmann-La Roche Ltd (2003) 130 FCR 317, the Full Court was confronted with a class action concerned with alleged price fixing in the vitamins market. Some of the class members — like Ms Bray — were individuals, but many were large entities located at various points along the vitamin supply chain. Ms Bray was not able to put up security, although there was no suggestion that she had been put up as a ‘straw woman’. The critical feature in the case appears to be that the Full Court apprehended that there were large entities (i.e. retailers and so on) standing behind Ms Bray that could afford to put up security for costs. The Court was unanimous in

that context in concluding that s 43(1A) did not have the effect of preventing security from being ordered. The principle was recently reaffirmed by the Full Court in Madgwick v Kelly (2013) 212 FCR 1 at [6]. It was nevertheless held in that case that it was still legitimate to take into account in assessing whether to order security the fact that costs could not, by dint of s 43(1A), be ordered against an individual class member (at [6]). The outcome of these two decisions is that the fact that costs may not be awarded against class members is a relevant matter to be taken into account, but does not necessarily provide a basis for refusing an application for security for costs.

33.20

De Jong v Carnival PLC (No 3) [2016] NSWSC 1461; De Jong v Carnival PLC [2016] NSWSC 347 (Beech-Jones J)

These proceedings were representative proceedings under Civil Procedure Act 2005 (NSW) Pt 10. The representative party, Lucretia de Jong, sued Carnival PLC trading as Carnival Cruise Line (Carnival), in her own right and on behalf of all other persons who booked and paid for a cruise that left Sydney on 10 March 2015 bound for New Caledonia. As a result of cyclonic activity in New Caledonia, the cruise changed course for Melbourne and Hobart. On 29 January 2016, Carnival filed a notice of motion seeking an order that Ms De Jong provide security for its costs of the proceedings in the sum of $686,890.97 and that the proceedings be stayed for so long as that sum was not provided. The notice of motion was adjourned in De Jong No 1. His Honour concluded that that the court had the power to order security for costs against the representative party in representative proceedings, but not against group members. His Honour also found that it could stay the proceedings in the event that security is not provided, although the court might order that the proceedings no longer continue as representative proceedings before ordering a stay. It was observed that the power to order security [page 528]

for costs is to be exercised in the manner stated by Carr J in Bray v F Hoffman-La Roche Ltd [2003] FCAFC 153 at [141], namely by balancing the policy reflected in Civil Procedure Act s 181 against the risk of injustice to a defendant. The proper course was to include a question in the opt-out notice as to group members’ willingness to contribute 15% of the cost of the cruise, to satisfy an order for security. De Jong No 3 concerned the security for costs application in light of the responses received. The court found (at [31]): … it would be unfair to impose on Carnival all the financial risks of the proceeding and have group members bear none bearing in mind the nature of the interest they seek to vindicate, namely, the lost opportunity to obtain a refund from a holiday that did not meet their expectations. It is appropriate to order the provision of an amount of security that provides some measure of protection to the defendant in the event that it is successful, including for the costs it has incurred and is entitled to recover but which is also proportional to my approximate estimate of the maximum size of the claim it faces, namely $2,000,000. The amount that will be ordered represents less than 10% of the total cost of the fares that were paid for and my estimate of the highest value of the plaintiff and group members’ claims. It is still an amount that is significantly less than the plaintiff’s estimates of the costs it is likely to incur but as stated in De Jong No 1 at [68] it ‘would not be an appropriate means of addressing the potential unfairness [to Carnival] to impose a disproportionate cost on group members as the price of remaining in the representative action’.

33.21

Woodhouse v McPhee (1997) 80 FCR 529 (Merkel J)

The applicant, as a representative party on his own behalf and for the benefit of others, claimed payments by the respondents of amounts due to them as employees but that were unpaid as a result of the company’s liquidation. The respondents applied for security of costs on the basis that the applicant may not be able to satisfy costs if they were awarded against him. Merkel J stated (at 533): Section 56 confers a broad discretion on the Court which is to be exercised by reference to the particular circumstances arising in each case. Accordingly, the Court should be cautious about enunciating general rules that might fetter that discretion. However, in my view there is no reason why, in general, the fact that a proceeding is brought for the benefit of others under Pt IVA ought not to be a consideration which together with other considerations can favour the ordering of security. Indeed, s 33ZG(c)(v) provides that, except as otherwise

provided by Pt IVA, nothing in the Part affects the operation of any law relating to security for costs. Consequently nothing in Pt IVA is to affect the operation of s 56 and O 28 in relation to security for costs or is to impede orders being made for security for costs in Pt IVA cases on the same basis as may be ordered in other cases.

[page 529] On the other hand it would be incongruous and anomalous for Parliament specially to confer a direct costs immunity under s 43(1A), inter alia to afford represented persons greater access to justice, and then for the courts indirectly to remove the effect of that immunity by making orders for security for costs on the basis that the applicant is bringing the proceedings for the benefit of others who ought to bear their share of the potential costs liability to other parties. In my view, in order to deal with that incongruity and anomaly the fact that an impecunious applicant is bringing a Pt IVA proceeding for the benefit of represented persons, whilst a relevant consideration in favour of granting security, ought not of itself be as significant a consideration as it might otherwise be in favour of the granting of security. My view is based on the significance of s 43(1A) in relation to a Pt IVA proceeding in which an application is made for security for costs and not upon any provision in Pt IVA as such relates solely to the weight to be given to a particular consideration as a factor in relation to the exercise of the Court’s discretion to order security for costs. For these reasons the conclusions I have drawn from s 43(1A) do not conflict with s 33ZG(c)(v), nor do they result in any limitation on the Court’s general discretionary power to order security for costs.

33.22

Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317; 200 ALR 607; [2003] FCAFC 153 (Carr, Branson and Finkelstein JJ)

For the purpose of s 33ZGF, the relevant facts are that the applicant received an invalid pension and had net assets of around $73,000. Carr J stated (at [140]–[142]): It is true that s 43(1A) if [sic] the FCA precludes, subject to certain qualifications not here relevant, an award of costs against a group member other than the representative party. But as his Honour noted in the extract from his reasons in Woodhouse reproduced above, s 33ZG(c)(v) provides that, except as otherwise provided in Pt IVA, nothing in that Part affects the operation of any law relating to security for costs.

Depending on the particular circumstances, I do not think that an order providing reasonable security for costs operates indirectly to remove the effect of the immunity provided by s 43(1A). It is one thing for a group member to be saddled with an order for what might be joint and several liability for a very substantial costs order at the end of the hearing of a representative proceeding, but it is another thing to have the choice of contributing what might be a modest amount to a pool by which the applicant might provide security for costs. It is a question of balancing the policy reflected in s 43(1A) against the risk of injustice to a respondent … which, on the admitted facts,

[page 530] has no chance of recovering very substantial costs from the applicant if it is successful in defending the proceedings. Much would depend upon the number of group members involved, their financial circumstances and in particular whether an order for security for costs might stifle the proceedings. In that regard, in my opinion, it was for the applicant to adduce evidence about the likely effect of any order for security for costs. She chose not to do so and in my view, in those circumstances, the discretion having miscarried, it should be exercised again.

33.23

Additionally, Finkelstein J held (at [250]–[252]):

I agree substantially with what is said by Carr J, especially as regards the relationship of ss 33VG(v) and 43(1A) of the Federal Court Act. The effect of the first provision is to ensure that an application for security for costs is not confronted with any special hurdle based on the type of proceeding (a group proceeding) in which it is made. The effect of the second is to protect represented parties in relation to any costs order which may be made in the action. There is no overlap between the two sections. The judge was of the opinion that the effect of s 43(1A) would be undermined if a security order was made. The judge said it would be ‘incongruous and anomalous’ to make an order for security in light of s 43(1A). But if it be correct that the two sections operate independently of one another, there can be no such incongruity or anomaly. This is not to say that the fact that a proceeding is a group proceeding is irrelevant to the question whether security should be granted. To the contrary, the character of such a proceeding sometimes gives rise to features not found in ordinary civil litigation which may go against or in favour of the provision of security. … Dependent upon the type of proceeding, the represented group may be quite diverse. The group may include corporations as well as natural persons. The members of the group, whether corporate or not, may be rich or poor. In my view, the characteristics of the group should be taken into account on an application for security. Accordingly, if there is still a rule that an order for security should not be made against an impecunious natural person (for a criticism of the absoluteness of this rule see Melville v Craig Nowlan & Associates Pty Ltd (2002) 54 NSWLR 82), the rule may have little application to many class actions.

33.24

Madgwick v Kelly (2013) 212 FCR 1; 299 ALR 188; [2013] FCAFC 61 (Allsop CJ, Jessup and Middleton JJ)

The proceedings concerned a suite of litigation commenced by the applicant and group members, who were all investors in a forestry plantation scheme that failed. The cases were being pursued against Wilmott Forests Ltd and Bioforest Ltd, as the responsible entities for the schemes, and also included lenders who financed some of the investors in the scheme. [page 531] At first instance, the respondents sought an order for security for costs. The application was refused. They sought to appeal the decision. In allowing the appeal, Allsop CJ and Middleton J considered the dichotomy between s 43(1A) and s 33ZG(c)(v) of the Act. They found that the primary judge had failed to follow the decision in Bray v Hoffman-La Roche (2003) 130 FCR 317, which made it clear that ‘an order for security did not affect the immunity of s 43(1A) and there was no overlap between ss 43(1A) and 33ZG(c)(v), which operate independently’: at [39]. 33.25 Having overcome that hurdle, the court then considered whether security should have been awarded. The court recognised that it must undertake a balancing exercise between the policy underlying representative proceedings and the risk of injustice to a respondent in having no real capacity to recover costs if it successfully defends the litigation. The Full Court’s decision recognised some important features of the kind of class actions that are now being pursued in Australia — namely, group members making active choices to participate in litigation, and litigation funders standing behind class action proceedings. A range of factors must be taken into account, including: whether granting an application for security for costs is likely to stifle the

applicant and group members’ pursuit of their claims; the financial circumstances of the group members, for which the applicant bears the onus of proof; the unwillingness of group members to contribute for security for costs, and the reasonableness of requiring group members to do so; and the availability of litigation funding. The Full Court determined that security for costs should have been awarded, noting that (at [99]): … the applicants and group members entered commercial transactions for their own reasons … [i]t seems entirely fair that those standing to benefit from such litigation make a real, but not oppressive, contribution to a fund to secure the costs of the respondents.

33.26

Kelly v Willmott Forests Ltd (in liq) (No 3) [2014] FCA 78 (Murphy J)

Following the Full Court’s decision in Madgwick, Murphy J made orders that the solicitors for the applicants write to each of the group members informing them that: (a) the court intends to fix security for costs to be paid by the applicants and group members in the sum of $6.58 million, to be paid in three stages; (b) the security has been set by reference to the likely financial capacity of the group members who stand to benefit from the proceedings if successful; and [page 532] (c) if the security for costs ordered is not paid, it is likely that the court will stay the proceedings. In Kelly v Willmott Forests Ltd (in liq) (No 3) [2014] FCA 78, Murphy J

outlined the response to the memorandums, noting that approximately 89% of the unknown group members and 18% of the known group members failed to respond: at [40]–[42]. Those who did respond pledged to provide security in the amount of $1,798,582, comprised of $1,700,367 pledged by known group members and $98,214.00 from unknown group members: at [49]. However, the contributions fell short of the pledged amounts, such that only $1.73 million was available for security: at [50]. Murphy J determined (at [86]–[87]): While I have ordered some further steps to be taken, I doubt that substantial further contributions will be made by the group members, and M and K has not presently received all of the $1.73 million pledged. Leaving aside the fruits of the further steps I have ordered, I consider it likely that if security of more than $1.73 million is ordered then the applicants will be unable to provide it. The claims of the applicants and in the order of 500 group members will stultify even though they have made a real contribution to security, or were financially unable or reasonably unwilling to do so. In my view a real injustice will be done to those applicants and group members who: (a) have contributed to security; or (b) (taking a broad view) are financially unable or reasonably unwilling to do so; if I were to presently order security greater than $1.73 million.

Murphy J observed that if security for costs is to be assessed by reference to the failure of unidentified group members to respond, then it will be very difficult, perhaps impossible, for an applicant to avoid the action being stayed. He considered that to balance the respondents’ legitimate concern to obtain some security for costs against the risk of stultifying the proceedings, the better approach was to winnow the class down. He therefore made orders which had the effect of reducing the size of the class by: ordering the opt-out process to occur; reducing the class by excluding those group members who refuse to respond to the requests for security; and reducing the class by excluding those group members who, taking a broad view, do not made a real but not oppressive contribution to security or have not shown an inability, or reasonable unwillingness, to contribute to security.

The final two steps were to be achieved by way of class closure orders: see [90]–[96]. [page 533]

33.27

Matthews v SPI Electricity Pty Ltd (No 9) [2013] VSC 671 (Derham AsJ)

These proceedings were heard in the Supreme Court of Victoria several months after Madgwick v Kelly and Kelly v Willmott Forests Ltd (in liq) (No 2) [2013] FCA 732 were decided. An application for security for costs was made in a group proceeding in which Mrs Matthews, as representative plaintiff, was bringing claims against SPI Electricity and others, for damages for personal injuries, property damage and economic loss suffered as a result of the Black Saturday bushfire in Kilmore East. The application for security for costs was made against both the plaintiff and also the insurers of group members. The court considered Bray v Hoffman-La Roche (2003) 130 FCR 317 and Woodhouse v McPhee (1997) 80 FCR 529 and found that despite the limited Victorian authority directly supporting the power, the width and purpose of the power conferred by s 33ZD extends to enable the Supreme Court of Victoria to order security for costs in appropriate cases: at [84]. 33.28 In determining whether the court’s discretionary power to order security for costs was enlivened, Derham AsJ considered the balance between ensuring that the defendant is protected, while avoiding injustice and prejudice to an impecunious plaintiff: see Rosenfield Nominees Pty Ltd v Bain and Co (1988) 14 ACLR 467 at 470. The court considered that while the plaintiff’s claim appeared to be bona fide and with merit, it was clear the plaintiff would not be able to pay SPI’s costs if so ordered (at [97], [118]), and was not indemnified by the funding insurers in relation to such costs: at [87]– [88].

After weighing a large number of discretionary factors, the court ultimately held (at [181]) that while the power to make an order for the plaintiff to provide security for the costs of SPI was enlivened, in the exercise of the court’s discretion it was not appropriate to make any such order in this case. The court then considered its power to order security for costs against the insurers who had subrogated their rights to recover amounts they had paid out under the relevant insurance policy. As part of their opposition to the claim for security, the insurers argued that they were effectively standing in the shoes of the group members. The court therefore made a number of comments about its power to order security against group members. 33.29 The court highlighted an important distinction between the provisions in the Federal Court Act and the Victorian Supreme Court Act. Federal Court Act s 33ZG(c)(v) expressly preserves the court’s power to order security for costs. No such provision is found in Victorian Supreme Court Act s 33ZD. Accordingly, Derham AsJ found that s 33ZD(b) denies the court’s power to order security against group members: at [162]; see also [54]–[55]. [page 534] However, Derham AsJ went on to explain that the power that costs are at the discretion of the court in Victorian Supreme Court Act s 24 is only curtailed by the express words of s 33ZD. His Honour stated (at [176]) that the power: … [does not] cover the field of all potential orders for costs. The specific mention of the power to order costs against the plaintiff or defendant, and the exclusion of the power to order costs against the group members except as otherwise authorised in ss 33Q or 33R, only qualifies the general power in s 24 as far as it goes. It does not, in my view, exclude the power otherwise existing to make orders against non-parties.

The court ultimately rejected that the insurers were in effect the group members and thus entitled to the protection afforded by s 33ZD. The court found that ‘the Insurers may be in the shoes of the group members, and be

acting pursuant to their rights of subrogation, but they are not the group members’: at [177]. In any event, the court concluded that the power of the court to order security against third parties (such as insurers in the present case) was not enlivened because there was no suggestion, nor any submission, of any risk that the insurers would be unable to pay costs if any were ordered against them at the conclusion of the trial of the common questions or ultimately at the conclusion of all consequent proceedings: at [179].

[page 535]

CHAPTER 34

Special Provision Relating to Claims Under Part VI of the Competition and Consumer Act 2010: s 33ZH • OVERVIEW • Section 33ZH clarifies the power that the Federal Court has to grant relief to group members making claims under the Competition and Consumer Act 2010 (Cth). Group members are not ‘parties’ to a representative proceeding: see the discussion of the status of group members in s 33A (Chapter 2). However, Competition and Consumer Act s 87 and Australian Consumer Law s 238 refer to the court granting relief to ‘a person who is a party to the proceeding’. The consequence of that limitation on relief, in the context of a representative proceeding, would be that the court would lack the power to grant relief to group members in those kinds of claims. Section 33ZH rectifies that anomaly. Section 33ZH(2) also acts to circumvent any difficulty which arises from the power conferred on the court by Competition and Consumer Act s 87(1A) and Australian Consumer Law s 237(1). Those provisions refer to an injured person making an ‘application’, and the Australian Competition and Consumer Commission (ACCC) making an ‘application’ in respect of certain contraventions. Section 33ZH(2) provides that those applications in a representative proceeding are also taken to be an application for and on behalf of group members. There is no equivalent provision to s 33ZH in Victoria, New South Wales or Queensland. This is because s 33ZH relates specifically to federal jurisdiction.

• LEGISLATION • Section 33ZH, Federal Court of Australia Act 1976 (Cth) (1) For the purposes of the following provisions, a group member in a representative proceeding is to be taken to be a party to the proceeding: (a) subsection 87(1) of the Competition and Consumer Act 2010; (b) subsection 238(1) of Schedule 2 to that Act, as that subsection applies as a law of the Commonwealth.

[page 536]

(2) An application by a representative party in a representative proceeding under: (a) subsection 87(1A) of the Competition and Consumer Act 2010; or (b) subsection 237(1) of Schedule 2 to that Act, as that subsection applies as a law of the Commonwealth; is to be taken to be an application by the representative party and all the group members.

• COMMENTARY • Section 33ZH(1) — Group Members are Parties to the Representative Proceeding 34.1 Section 33ZH(1) is a deeming provision which provides that a group member is taken to be a party to a representative proceeding for the purposes

of compensation provisions set out in the Australian Consumer Law: see Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd [2017] FCA 14. 34.2 Competition and Consumer Act s 87(1) and s 238(1) of Sch 2 to that Act refer to the court granting relief to a person who is a ‘party’ to the proceeding: 87 Other Orders (1) Without limiting the generality of section 80, where, in a proceeding instituted under this Part, or for an offence against section 44ZZRF or 44ZZRG, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IV or Division 2 of Part IVB the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, 86C, 86D or 86E, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage. [Emphasis added] 238 Compensation orders etc. arising out of other proceedings (1) If a court finds, in a proceeding instituted under a provision of Chapter 4 or this Chapter (other than this section), that a person (the injured person) who is a party to the proceeding has suffered, or is likely to suffer, loss or damage because of the conduct of another person that: (a) was engaged in a contravention of a provision of Chapter 2, 3 or 4; or

[page 537] (b) constitutes applying or relying on, or purporting to apply or rely on, a term of a consumer contract that has been declared under section 250 to be an unfair term; the court may make such order or orders as it thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct. Note: The orders that the court may make include all or any of the orders set out in section 243. [Emphasis added]

34.3

As group members are not technically ‘parties’ to the representative

proceeding, the consequence of that limitation on relief, in the context of a representative proceeding, would be that the court would lack the power to grant relief to group members in those kinds of claims. Section 33ZH rectifies that anomaly. The Explanatory Memorandum to the Federal Court of Australia Amendment Bill 1991, which refers to the now defunct Trade Practices Act 1974 (Cth) states (at [54]): New section 33ZH makes it clear that the Court has power to give relief to group members under section 87 of the Trade Practices Act 1974. Section 87 of that Act enables the Court to make remedial orders in cases where there has been a contravention of Part V (Consumer Protection) and, in relation to subsection 87(1), also Part IV (Restrictive Trade Practices) of the Act.

Group members’ eligibility for relief, as a result of s 33ZH(1), was aptly summarised by Lindgren J in Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 530: Section 33ZH(1) would have the effect that all other loss suffering group members would be taken to be ‘parties’ also for the purpose of s 87(1), that is, for the purpose of being entitled to apply for compensatory orders after the Court makes a finding of contravention.

Section 33ZH(2) — Application by Representative Party and All Group Members 34.4 Section 33ZH(2) also acts to circumvent any potential difficulty imposed by the language of Competition and Consumer Act s 87(1A) and Australian Consumer Law s 237(1). Section 87(1A) provides: (1A) Without limiting the generality of sections 51ADB and 80, the Court may: (a)

on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Division 2 of Part IVB; or

(b)

on the application of the Commission in accordance with subsection (1B) on behalf of one or more persons who have suffered,

[page 538]

or who are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IV (other than section 45D or 45E) or Division 2 of Part IVB; or (ba)

on the application of the Director of Public Prosecutions in accordance with subsection (1BA) on behalf of one or more persons who have suffered, or who are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of section 44ZZRF or 44ZZRG;

make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will:

34.5

(c)

compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage; or

(d)

prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person.

Australian Consumer Law s 237(1) provides:

237 Compensation orders etc. on application by an injured person or the regulator (1) A court may: (a) on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that: (i) was engaged in a contravention of a provision of Chapter 2, 3 or 4; or (ii) constitutes applying or relying on, or purporting to apply or rely on, a term of a consumer contract that has been declared under section 250 to be an unfair term; or (b) on the application of the regulator made on behalf of one or more such injured persons; make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.

34.6 Section 33ZH(2) makes it clear that any representative proceedings commenced by a person pursuant to these provisions is also commenced for and on behalf of all of the group members. The main consideration of s 33ZH(2) in the authorities concerns whether the Australian Competition and Consumer Commission (ACCC) can

pursue an application on behalf of group members under Competition and Consumer [page 539] Act s 87(1A) (or Trade Practices Act 1974 (Cth) s 87(1A) as it used to be) given that the ACCC already has a similar power to act for others under Competition and Consumer Act s 87(1B) (also Trade Practices Act s 87(1B)): 87 Other Orders (1B) The Commission may make an application under paragraph (1A)(b) on behalf of one or more persons identified in the application who: (a) have suffered, or are likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IV (other than section 45D or 45E) or Division 2 of Part IVB; and (b) have, before the application is made, consented in writing to the making of the application.

34.7 This issue was first considered by Branson J in Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250. Her Honour was required to determine whether the legislature intended that the ACCC should not be entitled to proceed under Federal Court Act Pt IVA (notwithstanding that it was able to satisfy its literal requirements). Branson J concluded (at 255) that Pt IVA should not be read down just because s 87(1B) provided a similar power. This meant that the ACCC were able to commence their proceeding on behalf of others under Pt IVA. Her Honour’s reasoning was followed by O’Loughlin J in Australian Competition and Consumer Commission (ACCC) v Golden Sphere International Inc (1998) 83 FCR 424 at 446. 34.8 The validity of Branson and O’Loughlin JJ’s decisions was considered by Lindgren J in Giraffe. The respondents claimed that Chats House and Golden Sphere were ‘plainly wrong’. In Giraffe, it was argued that allowing the ACCC to pursue an application under s 33ZH(2) on behalf of others created

a new right, where none had previously existed. Lindgren J agreed that a new right had been created. However, his Honour held that the two procedures were capable of standing together, and merely provided the ACCC with a ‘choice’. The ACCC therefore had standing to commence a representative proceeding under Pt IVA: at 530.

• CASE LAW • 34.9

Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250; 142 ALR 177; 22 ACSR 539 (Branson J)

On 24 April 1996, the ACCC filed an originating application and statement of claim for injunctive relief and damages against Chats House Investments Pty Ltd [page 540] (Chats House) and three other respondents for alleged fraud under Federal Court of Australia Act 1976 (Cth) Pt IVA and Trade Practices Act 1974 (Cth) s 87(1B). The ACCC filed on behalf of former clients of Chats House, an investment company which received a total $822,803.84 to invest in foreign exchange trading. This did not occur, yet Chats House charged its clients under the guise of interest and margin call payments. The other three respondents were individuals recruited by Chats House to act as ‘brokers’ in the fraudulent upkeep of Chats House’s ‘charade’. 34.10 In relation to s 33ZH, Branson J was required to determine whether the legislature intended that the ACCC should not be entitled to proceed under Federal Court Act Pt IVA (notwithstanding that it was able to satisfy its literal requirements) given that the ACCC had a similar power to act for others under s 87(1B).

Branson J concluded that Pt IVA enabled the ACCC to commence their proceeding on behalf of others under Pt IVA, observing (at 255): Nothing, in my view, suggests that the legislature intended Pt IVA of the Federal Court Act to be read down by reason of an existing provision such as s 87(1B) of the Trade Practices Act. Although Pt IVA of the Federal Court Act has a wider application than s 87(1B) of the Trade Practices Act, it should not, in my view, be regarded as the sort of ‘general’ provision to which should be applied the rule of construction that where there is a conflict between a ‘general’ and a ‘specific’ provision, the ‘specific’ provision should prevail on the ground of repugnancy (Mitty’s Authorised Newsagency v Registrar of Trade Marks (1983) 78 FLR 217 at 227–229 per Beaumont J). Here, the later enactment, namely Pt IVA of the Federal Court Act, ought, in my view, to be construed as being applicable according to its terms, notwithstanding the provision of s 87(1B) of the Trade Practices Act which specifically authorises the institution of proceedings of this nature by the applicant.

34.11

Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512; 156 ALR 273; [1998] FCA 819 (Lindgren J)

The ACCC brought an application on its own behalf and as a representative party under Pt IVA. The group members to whom the application related were described as ‘all persons who have suffered, or are likely to suffer, loss or damage as a result of membership [of] or participation in the “Giraffe Club” and the “Grow Rich System” (hereinafter collectively referred to as the scheme) since in or around July 1997’: at 516. It was alleged that the scheme involved contraventions of Trade Practices Act 1974 (Cth) s 57 (referral selling) and s 61 (pyramid selling). [page 541] 34.12 The respondents submitted that the ACCC was not entitled, as a representative party, to commence the proceedings under Pt IVA. One of their submissions was that the ACCC’s representative action under Pt IVA for relief under Trade Practices Act s 87 on behalf of group members was incompetent. They submitted that the maxim generalia specialibus non derogant applied with the result that the ACCC may not make an

application for relief pursuant to Trade Practices Act s 87(1A) on behalf of individuals who have suffered loss, unless it complied with s 87(1B): at 524. Alternatively, they submitted that, as a matter of discretion, the judge should exercise the power given under Federal Court Act s 33N to order that the proceedings no longer continue under that Part. 34.13 The respondents questioned the validity of earlier decisions (Chats House and Golden Sphere) which allowed the ACCC to lodge representative proceedings under Pt IVA (as a result of s 33ZH). Indeed, the respondents claimed that these earlier decisions were ‘plainly wrong’. It was argued that allowing the ACCC to lodge an application under s 33ZH(2) on behalf of others created a new right, where none had previously existed. Lindgren J agreed that a new right had been created. However, his Honour explained that the two procedures were capable of standing together, and merely provided the ACCC with a ‘choice’. His Honour stated (at 530): … the two procedures are capable of standing together. This view emphasises that the effect of s 87(1A) and (1B) is to create a new right in the ACCC where none previously existed and that Pt IVA creates a new right in any person to bring proceedings on behalf of others as well as on his or her own behalf. On this view, the effect of the two schemes is simply to give the ACCC the choice of either (a) acting as a representative ab initio for all persons who have suffered loss under Pt IVA, or (b) waiting until a finding of contravention of liability has been made, and then, subject to identifying and obtaining the written consent of loss sufferers, applying for compensatory orders on their behalf. Although the ACCC may be more likely to choose the former course because of its ‘opt in’ nature, it does not follow that the two legislative schemes themselves are incompatible. But even consistently with this view, the availability of the procedure under s 87(1A) and (1B) is relevant to the exercise of the Court’s discretion under s 33N. The Court may consider it appropriate that a proceeding continue as one by the ACCC under s 87(1A) and (1B) of the TP Act, rather than under Pt IVA of the FCA Act. In sum, I am not persuaded by the further submission … that Chats House and Golden Sphere were plainly wrong in the respect in question. Accordingly, I proceed on the basis that the ACCC had a claim against the respondents immediately prior to the commencement of the proceeding on 6 May 1998 and had standing to commence a representative proceeding under Pt IVA.

[page 543]

CHAPTER 35 Reimbursement of a Representative Party’s Costs: s 33ZJ • OVERVIEW • Section 33ZJ provides that where an award of damages has been made in a representative proceeding, the representative party may apply to the court for an order that its costs reasonably incurred in bringing the action may be recovered out of the damages awarded in the proceedings, where the representative party’s costs are likely to exceed costs recoverable from the defendant. The provision is designed to ensure that the representative party is not left ‘out of pocket’ for successfully pursuing a claim, not only for their own benefit, but also for the benefit of the group members. The provision and the policy behind it have been referred to by the courts in respect of common fund applications — both in support of the application and also in opposition to it.

• LEGISLATION • Section 33ZJ, Federal Court of Australia Act 1976 (Cth) Reimbursement of representative party’s costs (1) Where the Court has made an award of damages in a representative proceeding, the representative party or a sub-group representative party, or a person who has been such a party, may apply to the Court

for an order under this section. (2) If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the representative proceeding by the person making the application are likely to exceed the costs recoverable by the person from the respondent, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded. (3) On an application under this section, the Court may also make any other order it thinks just.

[page 544]

Section 33ZJ, Supreme Court Act 1986 (Vic) Reimbursement of plaintiff’s costs (1) If the Court has made an award of damages in a group proceeding, the plaintiff or a sub-group representative party, or a person who has been a plaintiff or such a party, may apply to the Court for an order under this section. (2) If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the group proceeding by the person making the application are likely to exceed the costs recoverable by the person from the defendant, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded.

Section 184, Civil Procedure Act 2005 (NSW) Reimbursement of representative party’s costs (1) If the Court has made an award of damages in representative proceedings, the representative party or a sub-group representative

party, or a person who has been such a party, may apply to the Court for an order under this section. (2) If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the representative proceedings by the person making the application are likely to exceed the costs recoverable by the person from the defendant, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded. (3) On an application under this section, the Court may also make any other order that it thinks just.

Section 103ZC, Civil Proceedings Act 2011 (QLD) Reimbursement of representative party’s costs (1) If the court makes an award of damages in a representative proceeding, any person who is or was a representative party or a subgroup representative party in the proceeding may apply to the court for an order under this section. (2) If, on an application under this section, the court is satisfied the costs reasonably incurred in relation to the representative proceeding by the [page 545] applicant are likely to exceed the costs recoverable by the applicant from the defendant, the court may order an amount equal to the whole or part of the excess be paid to the applicant out of the damages awarded. (3) On an application under this section, the court may also make any other order it considers just.

• COMMENTARY • Purpose of Provision 35.1 The purpose of s 33ZJ is to ensure a representative party can recover the totality of costs reasonably incurred in pursuing a successful claim for and on behalf of the group members: McMullin v ICI Australia Operations Pty Ltd (No 6) (FCA, Wilcox J, 27 November 1997, unreported) at [4]; see also Johnson Tiles Pty Ltd v Esso Pty Ltd (1999) 166 ALR 731 at 741. The rationale for the provision was considered by the ALRC in ‘Grouped Proceedings in the Federal Court’, Report 46 (1988) (at [289]) where the Commission stated: ‘It is fair that … [group members] should have to contribute to the solicitor-client costs where monetary relief is awarded, whether by way of aggregate or individual assessment.’ The Federal Court of Australia Act 1976 (Cth) (Federal Court Act) s 33ZJ, in substance, implements the ALRC’s recommendation. The Explanatory Memorandum to the bill which introduced Pt IVA into the Act explained (at [55]): The new Part does not affect the application of the ordinary costs rules applicable in the Federal Court for proceedings generally. However, where the representative party or a subgroup representative party is successful and secures a monetary award in favour of group members or sub-group members, as the case may be, it is appropriate that those group members contribute towards the amount by which the representative will be out of pocket for costs after recovering costs from the respondent. This section allows the court to make an order for a contribution from group members in these circumstances.

Interaction with Other Costs Provisions 35.2 The general principle in representative proceedings is that group members are not liable for costs. However, in many cases, that general principle is not strictly true. The Federal Court Class Actions Practice Note (GPN-CA), 25 October 2016, has a section dedicated to ‘Disclosure to Class Members Regarding Costs Agreements and Litigation Funding Agreements’. It relevantly provides: 5.2 Any costs agreement and litigation funding agreement must be in writing. 5.3 In circumstances where the applicants’ lawyers notify class members (who are clients or

potential clients of the applicants’ lawyers) of any applicable

[page 546] legal costs or litigation funding charges the applicant’s lawyers should ensure that the notification is: (a) in clear terms; and (b) is provided as soon as practicable. This is an ongoing obligation and applies to any material changes to the legal costs or litigation funding charges. 5.4 Failure to do so may be taken into account by the Court in relation to settlement approval under s 33V of the Federal Court Act (see paragraph 15.1 below). 5.5 The obligation on the part of the applicant’s lawyers to notify class members of any applicable litigation funding charges is satisfied if class members have been provided a document that properly discloses those charges. 5.6 When notifying class members of any applicable legal costs in accordance with paragraph 5.3 above, the applicant’s lawyers should bear in mind that there are various categories of legal costs which may arise in class actions. These may include: (a) common benefit costs, being costs incurred in connection with the common questions in the proceeding or in managing the proceeding for the benefit of the class overall; (b) sub-group costs, being costs incurred for the common benefit of the subgroup whose claims raise sub-group question(s); (c) individual costs, being costs incurred in connection with issues which are individual to particular class members (eg. individual damages assessments); and (d) any ‘uplift’ which the applicant’s lawyers intend to charge (where permitted by applicable professional practice rules or regulations). 5.7 The applicant’s lawyers should also bear in mind that the recoverability of legal costs in class actions is affected by: (a) section 43(1A) of the Federal Court Act, which limits the circumstances in which costs orders may be made against class members; (b) section 33ZJ of the Federal Court Act, which permits orders requiring that any damages awarded to class members be applied to reimburse the representative applicant for legal costs incurred by the applicant but not recovered from the respondent(s); and (c) sections 33V(2) and 33ZF of the Federal Court Act, which permit orders requiring that settlement payments be applied to reimburse the representative applicant for unrecovered legal costs. 5.8 When notifying class members of legal costs the applicant’s lawyers should provide information in relation to the applicable categories of legal costs and

[page 547] the different situations in which class members may be required to meet a share of unrecovered costs.

35.3 Further, courts have found opt-out notices that state group members are not liable for costs, without mentioning the effect of the operation of s 33ZJ, to be misleading: King v GIO Australia Holdings Ltd [2001] FCA 270. As a result, opt-out notices now include a reference to the potential cost consequences of s 33ZJ (and also litigation funding arrangements). The Federal Court Class Actions Practice Note (GPN-CA), 25 October 2016, in discussing opt-out notices provides: 11.2 The applicant’s lawyers should ensure that the opt out notice: (c) alerts class members to the fact and consequences of any costs agreement or litigation funding agreement made or intended for the proceeding;

The Federal Court sample opt-out notice also refers to the operation of s 33ZJ, and other costs consequences for group members: 6. Will you be liable for legal costs if you remain a class member? You will not become liable for any legal costs simply by remaining as a class member for the determination of the common questions. However: (a) if the preparation or finalisation of your personal claim requires work to be done in relation to issues that are specific to your claim, you can engage [Applicant’s lawyers] or other lawyers to do that work for you. A copy of the terms on which [Applicant’s lawyers] are acting in the class action may be obtained from them on the number/s shown below; (b) if any compensation becomes payable to you as a result of any order, judgment or settlement in the class action, the Court may make an order that some of that compensation be used to help pay a share of the costs which are incurred by the Applicant in running the class action but which are not able to be recovered from the respondents; and (c) class actions are often settled out of court. If this occurs in the class action, you may be able to claim from the settlement amount without retaining a lawyer.

The power under s 33ZJ supplements the general power of the court to order costs under Federal Court Act s 43: Wingecarribee Shire Council v Lehman Bros Australia (in liq) (No 8) [2013] FCA 411 at [15].

The ‘Free Rider’ Effect and Settlement 35.4 Section 33ZJ provides that costs may be recouped by the lead applicant from the other group members if an award of damages has been made. However, [page 548] it does not appear to contemplate whether contribution from group members is recoverable in circumstances where a settlement occurs but no award of damages has been made. 35.5 However, the Federal Court Class Actions Practice Note (GPNCA), 25 October 2016 clearly contemplates that settlements may include payment by group members to reimburse unrecovered legal costs. In a funded class action, settlements may also contemplate a ‘common fund’ distribution. 35.6

The Practice Note provides:

15. Court Supervision of Deductions for Legal Costs or Litigation Funding Charges 15.1 Where a proposed settlement contemplates that any part of the payments to be made to class members will be applied toward reimbursement of the unrecovered legal costs of the proceeding, or toward payment of litigation funding charges, the Court will usually require that the material filed in support of the application should demonstrate: (a) that reasonable steps were taken to alert class members to the likelihood of such deductions as soon as practicable after that became apparent, so that class members were, at the relevant time, able to take such steps as may have been practicably available to them to negotiate as to legal costs or as to litigation funding charges as applicable, or to remove themselves from the class action; and (b) that the amounts to be deducted have been calculated in accordance with the terms of the costs agreement and any litigation funding agreement.

In Earglow Pty Ltd Newcrest Mining Ltd [2016] FCA 1433, the court referred to the policy behind s 33ZJ in approving a settlement where an element of the distribution scheme included a proportionate payment of legal costs by unfunded group members (at [90]): However, unfunded RCMs did not retain solicitors and this provision of the Distribution

Scheme will mean that they will pay a proportionate contribution to the legal costs incurred in the proceeding. I have no difficulty with this. It is fair and reasonable that unfunded RCMs pay a proportionate share of the legal costs incurred to obtain a settlement from which they claim a benefit. I can see no good reason why funded RCMs, who effectively financed the proceeding, should carry the burden of legal costs alone. Orders requiring that unfunded or non-client class members make a proportionate contribution to legal costs incurred in bringing a class action from which they claim a benefit have been made in numerous cases: Thomas v Powercor Australia Ltd [2011] VSC 614 at [30] (Beach J); Modtech at [24]; Kelly at [325]–[326]; Newstart at [40]. Such orders are consistent with the policy behind s 33ZJ of the Act which has the aim that, upon success in a class action, class members pay a reasonable share of the applicant’s costs.

[page 549] As the court observed in Earglow, there are many cases where similar orders have been made: Thomas v Powercor Australia Ltd [2011] VSC 614 at [30]; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [24]; Kelly v Willmott Forests Ltd (in liq) (No 4) [2016] FCA 323 at [325]– [326]. 35.7 Similar issues were considered in earlier authorities, particularly where individual group members sought to resolve their claims ahead of other members of the group. In Courtney v Medtel (2002) 122 FCR 168, Sackville J considered submissions from the applicant that allowing the ‘piecemeal’ settlement of claims with individual group members would leave those group members whose claims were not settled with a greater exposure to costs, while those whose claims were settled would be immune from an order under s 33ZJ. The applicant argued that if those group members with a settlement were immune from an order under s 33ZJ, they become ‘free riders’, enjoying the benefits of litigation for which the applicant and represented group members are liable to pay. Sackville J observed that the legislation does not create a mechanism for dealing with the ‘free rider’ problems arising from individual settlements and otherwise found that it was premature to deal with the ‘free rider’ issue at that stage of the proceedings. 35.8 In King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 191 ALR 697, Moore J made the following comments about the

ramifications of individual unrepresented group members accepting a settlement (at 715): It may ultimately be appropriate to ensure that any unrepresented shareholder who does settle, contributes to the costs of prosecuting the representative proceeding. If they do not, there is the real possibility that remaining members of the representative group will have to bear, proportionally, a greater share of the costs of maintaining the proceeding in the event that the proceeding is ultimately settled on some collective basis either before or after the adjudication of any issues. If an individual shareholder who settles has to contribute to the costs of prosecuting the representative proceeding, it would be analogous to the process contemplated by s 33ZJ. [Emphasis added]

His Honour then considered a possible solution to the ‘free rider issue’, suggesting (at 715): In my opinion, if offers of settlement are ultimately made … it would be appropriate to consider establishing (and I presently think it probably would be appropriate), by direction of the court, a scheme in which some portion of any amount offered to settle a particular individual claim was reserved so that the court could, if settlement was effected, later consider whether all or any of the sum should be applied to satisfy the solicitor–client costs of Mr King as the representative party. How, precisely, that might be achieved if, as a matter of principle, it should be, can be addressed when the issue arises.

[page 550]

Not a Basis for Indemnity Costs 35.9 The result of s 33ZJ is that if the representative party is permitted to recover costs out of the award of damages, the pool of damages available to group members will be reduced. In Graham Barclay Oysters Pty Ltd v Ryan (No 2) [2000] FCA 1220, the Full Court (constituted by Lee, Lindgren and Kiefel JJ) held that this consideration was insufficient to justify an award of indemnity costs (at [5]–[7]): It is difficult to know on average the proportion of the awards that would be needed to satisfy an order under s 33ZJ. It may be that in a representative proceeding in which the respective amounts of damages payable to group members are large, the effect of an order under s 33ZJ would be less significant than one would be in the present case. It is generally accepted that an advantage of the representative proceeding for which Pt IVA of the Act provides is to enable the bringing of actions which would not be brought individually because of the smallness of the amounts likely to be recovered. To the extent

that this is so, the effect of this submission … is that generally an order under s 33ZJ does not justly compensate for the discrepancy between full costs and party and party costs and that indemnity costs should be awarded to the representative instead. We do not accept that the special features of representative proceedings identified in Mr Ryan’s submission provide an appropriate basis on which to order indemnity costs.

Section 33ZJ and the Common Fund Concept 35.10 The ALRC in its report, ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) (at [288]–[289]) drew on the American common fund doctrine as inspiration for s 33ZJ. The common fund approach to legal fees originally developed outside the US class action context. See John Dawson, ‘Lawyers and Involuntary Clients in Public Interest Litigation’ (1975) 88 Harvard Law Review 849, 916. The common fund approach was sourced from the historic equity jurisdiction of the US federal courts which was in turn derived from the English Court of Chancery: Trustees v Greenough, 105 US 527 at 536 (1882); Sprague v Ticonic National Bank, 307 US 161 at 164 (1939). In Trustees v Greenough at 532, the Supreme Court of the United States allowed a plaintiff to recover their reasonable legal fees they had incurred in restoring assets to a trust from the trust fund because: There is no doubt from the evidence that, besides the bestowment of his time for years almost exclusively to the pursuit of this object, he has expended a large amount of money for which no allowance has been made, nor can properly be made. It would be very hard on him to turn him away without any allowance except the paltry sum which could be taxed under the fee bill. It would not only be unjust to him, but it would give to the other parties

[page 551] entitled to participate in the benefits of the fund an unfair advantage. He has worked for them as well as for himself, and if he cannot be reimbursed out of the fund itself, they ought to contribute their due proportion of the expenses which he has fairly incurred. To make them a charge upon the fund is the most equitable way of securing such contribution.

35.11 The Supreme Court extended the common fund doctrine to allow lawyers to directly approach the court for a fee from a fund in Central Railroad & Banking Co v Pettus 113 US 116 at 127 (1885), where attorneys

were awarded fees equating to the reasonable value of their services from a fund created for a group of creditors in addition to the fee contracted for with the named plaintiffs. See also John Dawson, ‘Lawyers and Involuntary Clients: Attorney Fees From Funds’ (1974) 87 Harvard Law Review 1597 at 1602–3 (‘The Pettus case totally transformed [the Greenough holding] into an independent right of the lawyer, reinforced by lien, to an extra reward so that he might share the wealth of strangers.’ The fund concept was ‘employed to realize the broadly defined purpose of recapturing unjust enrichment’). In the class action context the common fund doctrine was examined by the Supreme Court of the United States in Boeing Company v Van Gemert 444 US 472 at 478 (1980): Since the decisions in Trustees v. Greenough … and Central Railroad & Banking Co. v. Pettus, … this Court has recognized consistently that a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.

The doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant’s expense. Jurisdiction over the fund involved in the litigation allows a court to prevent this inequity by assessing attorney’s fees against the entire fund, thus spreading fees proportionately among those benefited by the suit: Boeing Company v Van Gemert 444 US 472 at 478 (1980). See also ALRC, ‘Grouped Proceedings in the Federal Court’, Report No 46 (1988) at [289]. 35.12 Section 33ZJ, although derived from the common fund, does not operate in the same manner. The provision seeks to avoid a representative party being out of pocket in terms of non-recoverable legal expenses, that is, where the costs that the respondent is required to pay as the losing party are less than the costs reasonably incurred in bringing the class action. It does not address the payment of a portion or percentage of a group member’s recovery to the lawyer. 35.13 See Michael Legg, ‘Reconciling Litigation Funding and the Opt Out Group Definition in Federal Court of Australia Class Actions — The Need for a Legislative Common Fund Approach’ (2011) 30 Civil Justice

Quarterly 52 at 71–2. In Australia, attempts to establish common fund have been made [page 552] in cases where a litigation funder is involved. The applications have sought to order group members to pay a percentage of any settlement or judgment sum to a litigation funder, even where they have not executed a litigation funding agreement. The cases which have considered the issue are discussed in Chapters 22 and 32. Section 33ZJ has been deployed both as a shield and a sword in the common fund applications. In Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539, the provision was referred to the court as a reason for rejecting a common fund application (at [126]): A third difficulty with the applicants’ argument that the proposed order is appropriate or necessary to enable them to recover costs and expenses they will incur in recovering a fund for the benefit of group members is that there is, in any event, a specific provision in Pt IVA concerning a representative party’s rights to recover legal expenses. Section 33ZJ(2) of the FCA Act provides as follows: If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the representative proceeding by the person making the application are likely to exceed the costs recoverable by the person from the respondent, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded. The existence of this specific statutory right to recover costs from the damages awarded means that the proposed order is neither appropriate nor necessary in so far as it concerns the applicants’ entitlement to recover legal costs from any fund that might be realised. It is unnecessary because the applicants already have the right to approach the court for an order under s 33ZJ(2). Important also, is the fact that the right to approach the court under s 33ZJ(2) only comes into existence once damages are recovered. It also occurs at a time when the legal costs have in fact been incurred and the court is in a position to give some consideration to whether the costs incurred are in fact reasonable. This again points to the fact that the proposed order is premature. The fact that the applicants already have the specific right, pursuant to s 33ZJ(2), to recover costs from any damages awarded also suggests that the proposed order is more about the commission payable to ILFP than reimbursement of legal costs incurred by the applicants. In relation to costs, the effect of the proposed order is that group members are required to

pay ILFP amounts referable to legal costs incurred by the applicants but paid to the applicants’ solicitors by ILFP pursuant to the terms of the funding agreements. In short, group members will be required to pay a portion of the applicants’ legal costs from any recoveries made by them. Far from being consistent with the statutory scheme, this would appear to cut across the operation of s 33ZJ, which makes specific provision for the representative party to apply to the court for an order that any legal costs not recovered from a respondent be paid out of the damages awarded.

[page 553] However, in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 338 ALR 188, the Full Court held that the specific power in s 33ZJ did not curtail the broad ambit of s 33ZF and the resulting power of the court to make ‘common fund’ type orders pursuant to that provision (at [170]): [The respondent] argues that there is no power to make the proposed orders now. Rather, it submits that they can only be made at the time of settlement approval under s 33V or judgment. However, there is no basis to read down s 33ZF by reference to ss 33V, 33Z, 33ZA or 33ZJ. Section 33ZF is of broad ambit and is not so temporally limited. Even if it be accepted that ss 33V, 33Z, 33ZA or 33ZJ address a narrower timeframe, that does not imply that s 33ZF is to be read down. Neither the text nor context requires it.

• CASE LAW • 35.14

Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (2015) 325 ALR 539 (Wigney J)

An open representative proceeding was commenced by shareholders against Allco Finance Group Ltd, following alleged misleading or deceptive conduct, and continuous disclosure breaches. The two applicants involved in the proceeding had entered into a funding agreement with litigation funder International Litigation Funding Partners Pte Ltd. These two applicants subsequently sought an order, under s 33ZF, entitling them to pay the subsequent legal costs and funding fees out of any amounts recovered from the respondents. This would essentially mean that

all group members would become liable to pay the funder’s fees, regardless of having entered into a funding agreement with the litigation funder, or not. The Federal Court refused to make the order due to several issues with the applicants’ argument, including (at [126]–[127]): A third difficulty with the Applicants’ argument that the proposed order is appropriate or necessary to enable them to recover costs and expenses they will incur in recovering a fund for the benefit of group members is that there is, in any event, a specific provision in Pt IVA concerning a representative party’s rights to recover legal expenses. Section 33ZJ(2) of the FCA Act provides as follows: If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the representative proceeding by the person making the application are likely to exceed the costs recoverable by the person from the respondent, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded.

[page 554] The existence of this specific statutory right to recover costs from the damages awarded means that the proposed order is neither appropriate nor necessary insofar as it concerns the Applicants’ entitlement to recover legal costs from any fund that might be realised. It is unnecessary because the Applicants already have the right to approach the Court for an order under s 33ZJ(2). Important also, is the fact that the right to approach the Court under s 33ZJ(2) only comes into existence once damages are recovered. It also occurs at a time when the legal costs have in fact been incurred and the Court is in a position to give some consideration to whether the costs incurred are in fact reasonable. This again points to the fact that the proposed order is premature. The fact that the Applicants already have the specific right, pursuant to s 33ZJ(2), to recover costs from any damages awarded also suggests that the proposed order is more about the commission payable to ILFP than reimbursement of legal costs incurred by the Applicants.

Wigney J also subsequently held that (at [193]–[194]): In relation to costs, the effect of the proposed order is that group members are required to pay ILFP amounts referable to legal costs incurred by the Applicants but paid to the Applicants’ solicitors by ILFP pursuant to the terms of the funding agreements. In short, group members will be required to pay a portion of the Applicants’ legal costs from any recoveries made by them. Far from being consistent with the statutory scheme, this would appear to cut across the operation of s 33ZJ, which makes specific provision for the representative party to apply to the Court for an order that any legal costs not recovered from a respondent be paid out of the damages awarded. It follows that the Applicants’ submission that the proposed order is consistent with the

statutory scheme is rejected. If anything, the proposed order is inconsistent with the statutory scheme. An order that is inconsistent with the statutory scheme is not likely to be appropriate in the context of s 33ZF.

35.15 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 (Murphy, Gleeson and Beach JJ) For an overview of the facts, see case note in Chapter 32. The applicant sought orders pursuant to Federal Court Act s 33ZF with the effect of extending the litigation funding terms to all group members. The orders included requiring the applicant and all group members to pay the funder a pro rata share of the legal costs incurred and a funding commission at a reduced rate of 30% from any settlement or judgment in their favour. Paying this pro rata share meant that all group members were therefore required to share the burden of legal costs and litigation funding commissions equally, rather than solely those funded by the funder. [page 555] QBE argued that the court did not have the power to make the proposed orders now, at the beginning of the proceeding, and was instead obligated to wait until the time of settlement to consider such an order. Beach J held (at 170): … there is no basis to read down s 33ZF by reference to ss 33V, 33Z, 33ZA or 33ZJ. Section 33ZF is of broad ambit and is not so temporally limited. Even if it be accepted that ss 33V, 33Z, 33ZA or 33ZJ address a narrower timeframe, that does not imply that s 33ZF is to be read down. Neither the text nor context requires it.

The Full Court determined that it could, and would, make orders, but not precisely the orders sought by the applicant. The Full Court stated that upon the funder, the applicant and the applicant’s solicitor giving an undertaking to each other and to the court that they would comply with funding terms set out in annexure A to the judgment (a litigation funding agreement that set out the obligations and rights of the entities involved in the class action

but with the payment to the funder to be determined by the court), the court would order that prior to any distribution to group members the following amounts be deducted from any settlement or judgment and paid to the funder: (a) the legal costs incurred by the lawyers and paid by the funder; and (b) a percentage of any settlement or judgment to be determined by the court. However, no amount payable pursuant to the order could be greater than would be payable if the order was not made, that is, the terms of the funding agreement applied. This approach to costs, at an early stage in the proceeding, is to be contrasted with s 33ZJ, where a party can only approach the court once damages have been ordered. However, the determination of actual funding commission was (at [35]): … left for later consideration and approval by the Court, preferably at the time of settlement approval or the distribution of any damages award if the matter proceeds to judgment.

35.16

Courtney v Medtel Pty Ltd (2002) 122 FCR 168 (Sackville J)

The applicant was one of more than 900 group members who had had a particular pacemaker implanted. The respondents manufactured and distributed the pacemakers. About 125 of the group members were represented by the applicant’s solicitors, Maurice Blackburn Cashman (MBC). Some of the group members had not engaged MBC, and had accepted settlement offers communicated to them directly by the respondents’ solicitors. The applicant sought orders that the respondents be prevented from putting any settlement offer to remaining group members without the prior approval of the applicant’s solicitors. The issue for the court was whether the solicitor for an

[page 556] applicant in a representative proceeding has the right to control communications with group members, even though those group members have not retained that solicitor. 35.17 The relevance of s 33ZJ arose from the applicant’s submissions, which contended that if the defendant entered into ‘piecemeal’ settlements with some group members, it would give rise to a ‘free rider’ effect, where those group members with settlements would have attained the benefit of the legislation for which they were not liable to pay. His Honour observed (at 181): … the legislation [does not] … create a mechanism for overcoming the ‘free rider’ problems arising where group members obtain benefits from the legislation otherwise than in the form of an ‘award of damages’ within the meaning of s 33ZJ(1) of the Federal Court Act.

He further stated (at 188): If the settlement offers are so constructed as to deprive the applicant of the opportunity that otherwise would or might be available to make an application under s 33ZJ(2) of the Federal Court Act, there may be an issue as to whether the form of the settlement has any significance for any costs orders that may be made against the respondents later in the proceedings.

35.18

King v GIO Australia Holdings Ltd [2001] FCA 270 (Sackville, Hely and Stone JJ)

The applicant alleged that the respondent’s conduct during the takeover bid by AMP Insurance Investment Holdings for shares in GIO Australia Holdings Ltd was negligent, misleading or deceptive, and caused the applicant and group members to suffer loss and damage. The application was an appeal by the respondent against the form of an opt-out notice approved by the primary judge at first instance. The respondent contended that the primary judge had erred on a number of grounds, including that his Honour should have held the opt-out notice

contain a statement explaining the costs consequences of not opting out of the proceedings. The applicant’s lawyers did not seek to make group members liable for the costs incurred by the applicant in conducting the first stage of the proceedings. This was subject to the qualification that the applicant’s solicitors intended to apply to the court, at the conclusion of the proceedings, for an order under s 33ZJ of the Act that costs in excess of those recoverable from the respondents in respect of the first stage of the proceedings be paid out of any damages awarded in favour of group members. In light of that consideration (and others), the Full Federal Court considered that the notice in its current form was capable of creating a misleading impression in group members who receive it. The court rectified this issue by making an order [page 557] that a paragraph explaining the effect of s 33ZJ on group members be inserted into the opt-out notice.

35.19

King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 191 ALR 697; 121 FCR 480; [2002] FCA 872 (Moore J)

This case arose from the same factual matrix as King v GIO (above), but was not an application in those proceedings. In this application, the respondents sought access to the applicant’s solicitors’ client list to determine which group members were not represented by the applicant’s solicitors. The applicant’s solicitors did not object to disclosing the client list. The question for the court was, if the respondent intended to communicate with the unrepresented group members regarding settlement, what form of communication was appropriate. In deciding whether to grant the application, Moore J considered the

effect of the unrepresented group members accepting a settlement on the representative proceeding as a whole. His Honour noted that it may be appropriate that those who gain the benefit of individual settlements contribute to the costs of prosecuting the representative proceeding. 35.20 His Honour considered that a possible solution, at the relevant time, would be to consider establishing a scheme in which some portion of the settlement was reserved for the payment of any outstanding solicitorclient costs. However, no final resolution was reached on the issue as the relevant time had not yet arisen where settlement offers had been made. His Honour stated (at 715): It may ultimately be appropriate to ensure that any unrepresented shareholder who does settle, contributes to the costs of prosecuting the representative proceeding. If they do not, there is the real possibility that remaining members of the representative group will have to bear, proportionally, a greater share of the costs of maintaining the proceeding in the event that the proceeding is ultimately settled on some collective basis either before or after the adjudication of any issues. If an individual shareholder who settles has to contribute to the costs of prosecuting the representative proceeding, it would be analogous to the process contemplated by s 33ZJ.

35.21

Wingecarribee Shire Council v Lehman Bros Australia (in liq) (No 8) [2013] FCA 411 (Rares J)

The applicant claimed to have suffered losses as a result of acquiring a particular financial product from the respondent. [page 558] The application was to determine the appropriate costs order after a principal finding against the respondent. The applicant argued that it was entitled to costs on an indemnity basis, which Rares J ultimately ordered. Rares J mentioned s 33ZJ when considering whether an indemnity costs order could be made in a representative proceeding, noting that it supplements the general power of the court to make costs under Federal

Court Act s 43, and that s 43 permitted the award of indemnity costs in the court’s discretion.

35.22

Graham Barclay Oysters Pty Ltd v Ryan (No 2) [2000] FCA 1220 (Lee, Lindgren and Kiefel JJ)

The applicant, Mr Ryan, had brought a claim against the respondents for breach of the Trade Practices Act 1974 (Cth), and of their duty of care in negligence, regarding contaminated oysters which caused him to contract Hepatitis A. The application was to determine whether it was appropriate to grant indemnity costs against the respondents, following the respondents’ unsuccessful appeal. The Full Court unanimously declined to grant indemnity costs and upheld its original order for costs on a party and party basis. 35.23 First, the applicant contended in his submissions that there was likely to be a substantial discrepancy between the amount of his costs actually incurred and the amount he could recover on a party and party basis. In addressing this submission, the court held that any discrepancy is not in itself sufficient to justify indemnity costs, and party and party costs should ordinarily be ordered unless special circumstances exist. Second, the applicant claimed that any order under s 33ZJ would significantly reduce the damages available to group members. Their Honours held that this was not sufficient to qualify as a special circumstance justifying the award of indemnity costs, stating that ‘we do not accept that the special features of representative proceedings … provide an appropriate basis on which to order indemnity costs’: at [7].

35.24

Johnson Tiles Pty Ltd v Esso Pty Ltd (1999) 166 ALR 731 (Merkel J)

The solicitors for the applicants, Slater & Gordon and Maurice Blackburn Cashman (solicitors), entered into ‘no win no fee’ costs agreements with the

group members, which included 25% uplift fees if the representative proceeding was successful. Merkel J had previously approved an opt-out notice proposed by the solicitors that did not contain any statement concerning any potential liability group members may incur for legal costs, after an assurance by senior counsel that group members would not be so liable. Notwithstanding that assurance, the costs agreements between the solicitors and group members provided that group members would be liable for legal costs, including the 25% uplift fee, and the agreements were not made subject [page 559] to any court order, approval or supervision. The present application was made by the respondents, seeking to restrain the solicitors from enforcing those costs agreements. Merkel J granted the application and awarded indemnity costs personally against the solicitors. 35.25 In making the application, the respondents in the representative proceeding submitted that ‘no win no fee’ agreements were contrary to Pt IVA. Merkel J considered s 33ZJ in the context of Pt IVA, but ultimately held that the purpose of Pt IVA was not to regulate solicitors’ costs agreements. Rather, Merkel J held that its purpose was to ensure the court had the power to make orders that fairly and adequately reward solicitors for costs incurred regarding a representative proceeding. However, given that the solicitors had failed to uphold their promise to the court that they would not make group members liable for legal costs, his Honour upheld the application to restrain the solicitors from giving effect to their costs agreements.

35.26

Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 (Gordon J)

As part of the settlement it was proposed that a ‘funding commission’ be deducted from the individual entitlements of all group members and paid to CLF, the litigation funder, irrespective of whether the group members executed a funding agreement. The court rejected that aspect of the settlement. Gordon J observed (at [57]–[61]): CLF, as a litigation funder, made a commercial decision to fund these proceedings on the terms and conditions set out in the various LFAs [Litigation Funding Agreements]. Relevantly, it made a commercial decision to fund these proceedings by entering into a LFA with 92% of group members. Not 100% of the group members, just 92% of the group members. The question which arises is why should CLF be entitled to receive between 25% and 30% of the amount recovered by those group members who chose, for whatever reason, not to enter into a LFA (defined, erroneously, in the Settlement Distribution Scheme as ‘Informally Funded Registered Group Members’)? The deduction of the funding commission was never part of a commercial bargain reached by CLF with these so called Informally Funded Registered Group Members. In fact, for whatever reason, the Informally Funded Registered Group Members decided to do the direct opposite and not enter into a LFA. What has changed? I can identify no reason why the LFA should now be imposed on the Informally Funded Registered Group Members. They have not agreed to it. That does not mean that the Informally Funded Registered Group Members should get a windfall. On the contrary. the amount of the so called ‘funding

[page 560] commission’ (calculated on the amount of shares in GPT acquired by the group member during the ‘Claim Period’) should be deducted from each of their individual claims. However, instead of being paid to CLF, those amounts should be added back into the Settlement Sum and distributed pro rata to all group members. This approach may require an additional step or two in the calculation of an Individual’s claim but the result is fair and reasonable to all. These concerns were discussed with Counsel for Modtech. He submitted that the Funding Commission Deduction for Informally Funded Registered Group Members should be approved for the following reasons: 1.

Modtech, had agreed to it;

2.

notice of the deduction had been given to all group members and no objection had been lodged. For those reasons, it should be inferred that the group members consented or were at least indifferent;

3.

this class action was unusual because although it started as a closed class it was, for good reasons of public policy, subsequently opened;

4.

on 11 October 2012, Informally Funded Registered Group Members were notified that the damages payable to them would be reduced by the amount of funding commission that ‘they would have paid had they obtained litigation funding’; and

5.

it had been approved in a previous class action: see Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3) [2012] VSC 625.

None of these matters, individually or collectively, provide a basis for approving the Funding Commission Deduction for Informally Funded Registered Group Members as proposed in the Settlement Distribution Scheme. The fact that Modtech has agreed to it is irrelevant. The role of the Court is to consider whether the settlement is fair and reasonable for all group members. The first time that group members were notified of the Funding Commission Deduction for Informally Funded Registered Group Members was in the Notice of Proposed Settlement served on the group members pursuant to orders of the Court dated 30 May 2013. The fact that no notice of objection has been lodged is a relevant, but not determinative, consideration. As was conceded by Counsel for Modtech, the notice given to group members in this case was different (having regard to the timing of the notice and the stage of the litigation) to that considered in Pathway Investments. For that reason, Pathway Investments may be put to one side. Whether such an order should be made is a matter to be addressed in each case. For the reasons set out above (see [56]–[57]), it is difficult to conceive of a circumstance in which it would be appropriate.

[page 561]

CHAPTER 36 Order May Specify a Date by which Group Members Must Take a Step: s 33ZG Supreme Court Act 1986 (Vic) • OVERVIEW • Supreme Court Act 1986 (Vic) s 33ZG gives the court specific power to set out a step that all group members or a class of group members must take to be entitled to relief, payment or benefit arising out of the proceeding. If a group member does not take such a step by a date specified by the court, the group member will not be entitled to that relief, payment or benefit.

• LEGISLATION • Section 33ZG, Supreme Court Act 1986 (Vic) Order may specify a date by which group members must take a step Without limiting the operation of section 33ZF, an order made under that section may— (a) set out a step that group members or a specified class of group members must take to be entitled to— (i) any relief under section 33Z; or (ii) any payment out of a fund constituted under section 33ZA; or

(iii) obtain any other benefit arising out of the proceeding— irrespective of whether the Court has made a decision on liability or there has been an admission by the defendant on liability; (b) specify a date after which, if the step referred to in paragraph (a) has not been taken by a group member to whom the order applies, the group member is not entitled to any relief or payment or to obtain any other benefit referred to in that paragraph.

[page 562]

• COMMENTARY • Extension of General Power in s 33ZF 36.1 Section 33ZG is an extension of the general power in s 33ZF. Section 33ZF empowers the court to, of its own motion or on application by a party or group member, make any order that the court deems appropriate or necessary to ensure that justice is done in the proceedings. For a detailed discussion of s 33ZF, see Chapter 32. Section 33ZG does not limit the operation of s 33ZF, but makes it clear that s 33ZF enables the court to order group members to take certain steps by a particular time. In other words, s 33ZG provides clarification that orders specifying a date by which group members must take a step are within the Supreme Court of Victoria’s power and discretion. Section 33ZG operates only in the Supreme Court of Victoria, as it is not replicated in the federal, New South Wales or Queensland regimes: see Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 13) (2013) VR 255 at [15]; Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296 at [41].

Relied Upon by the Court to Make Orders Regarding Class Closure

36.2 Section 33ZG has been relied upon by the Supreme Court of Victoria to make orders regarding class closure. Class closure occurs where a court, usually to encourage a settlement of the proceeding, requires group members to take positive steps to identify themselves as having an interest in a judgment or proposed settlement. Such orders usually require group members either to opt out or register to participate in the class action by a fixed date. If a group member does not take the positive step, they will continue to be a group member, but will be precluded from sharing in the benefit of a judgment or settlement. 36.3

For a detailed discussion about class closure orders, see Chapter 32.

36.4 In Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 13), Forrest J held (at [63]–[68]) that subject to discretionary considerations, it was within the court’s power to permit a representative plaintiff to amend the class definition after the commencement of proceedings, although that amendment had the potential to exclude current group members. This decision is often cited in respect of class closure orders. 36.5 In Kamasaee v Commonwealth (No 8) [2017] VSC 167 (5 April 2017), McDonald J referred to the decision in Matthews, noting that Forrest J distilled the following principles which are relevant to an application for class closure (at [17]): [page 563] (i) It is within the court’s power to permit a representative plaintiff to amend the group definition so as, in effect, to convert an open class to a closed class proceeding. (ii) If, in the course of a proceeding an order is to be made converting the nature of the class from open to closed, it should only be made where the group members have adequate notice of the proposed change and a reasonable amount of time in which to determine whether to join the closed class. (iii) It is within the court’s power to order class closure in the sense that a member of the class must take a positive step such as identifying himself or herself after receiving notice of class closure. It is also within the court’s power to terminate the entitlement

to compensation of any group member who does not come forward and indicate a willingness to participate in a distribution (putative or real) pursuant to either a settlement or judgment. One of the fundamental bases for the class action provisions is achieving finality not only for the group members but also for the defendants to the proceeding. (iv) It may be appropriate to make orders for class closure prior to a settlement or judgment. Such a course may be warranted, notwithstanding that there is no prospective settlement but on the material available it is considered to be in the interests of the class as a whole to require such a step to be taken. Relevant considerations include: (a) the point at which the case has reached; (b) the attitude of the parties to such a step; and (c) the complexity and likely duration of the case.

36.6 In Mercieca v SPI Electricity Pty Ltd [2012] VSC 204, Emerton J held (at [41]) that an order contemplating a class closure is ‘specifically authorised by s 33ZG’. In these proceedings, the order contemplated was that group members who wished to claim compensation for their losses must register with the plaintiffs’ solicitors by a fixed date. Emerton J held that if a group member failed to take the step of registering with the plaintiffs’ solicitors, they would not be entitled to share in any settlement: at [41]. In Thomas v Powercor [2011] VSC 614, Beach J considered whether to make orders in regard to a proposed class closure, or alternatively to make orders permitting group members to opt out within a defined period. His Honour was persuaded (at [34]–[35]) that the latter course would not be appropriate, because it would allow group members to avoid contributing to the plaintiff’s unrecovered costs in the proceeding by entering into private settlement agreements on like terms with the defendants. In Mercieca, Emerton J explained (at [42]) that closure of the class by way of the requirement to register claims by a certain date facilitates the assessment and payment procedures. Emerton J agreed with Beach J’s reasoning in Thomas [page 564]

as to why class closure is appropriate in proceedings of this kind. Accordingly, Emerton J was satisfied that, provided adequate notice is given to the group members, ‘there is nothing unreasonable or unfair about a class closure order of the kind proposed’: at [43]. 36.7 Forrest J held in Matthews (Ruling No 13) (at [79]) that considerations relevant to class closure include: the point the case has reached, the attitude of the parties to such a step, and the complexity and likely duration of the case. Forrest J considered that the appropriateness of class closure orders involved a question of balance and judicial intuition, stating (at [76]): It requires a determination as to when in the course of a proceeding it is appropriate and in the interests of the group as a whole to require a step to be taken which may promote a prospective settlement as against simply letting the case proceed, perhaps interminably, without requiring group members to lift a finger — even if that course leads to disaster.

Forrest J considered that because class closure orders would potentially affect persons who had previously expected to be part of the group without taking further action, it was important that information concerning registration be circulated as widely as possible. His Honour determined that, given the mixed demographics of group members, notice should be given via ‘old media’ and ‘new media’, including a dedicated website, Facebook page and Twitter entries. Notice was also required to be given to those group members who had opted out of the claim, offering them an opportunity to rejoin the class: see [98]–[101]. In Kamasaee v Commonwealth (No 8) [2017] VSC 167 (5 April 2017), McDonald J refused to make a class closure order requested by the defendant, in part due to the strident opposition of the plaintiff and the difficulty in contacting some group members to inform them of the class closure orders. See also Jackson v GP & JM Bruty Pty Ltd (Ruling No 1) [2016] VSC 717.

• CASE LAW • 36.8

Matthews v SPI Electricity and SPI Electricity Pty Ltd v

Utility Services Corporation Ltd (Ruling No 13) (2013) VR 255; [2013] VSC 17 (Forrest J) Mrs Matthews, as representative plaintiff, was bringing claims in the Supreme Court of Victoria against SPI Electricity and others for damages for personal injuries and economic loss and property damage (ELPD) suffered as a result of the Black Saturday bushfire in Kilmore East. In these proceedings (Ruling No 13), Mrs Matthews sought to amend the group definition of those persons with personal injury or dependency claims to those who registered as claimants with Maurice Blackburn (the law firm representing [page 565] Mrs Matthews) by a certain date. Amending the group definition in this way would have the potential effect of excluding persons who were currently group members from this claim. However, those current group members who did not register would still be permitted to bring individual claims: at [2]. The suggested approach to ELPD claims was different. Mrs Matthews and each of the defendants agreed that those members of the group who wished to participate in a settlement (if one eventuated) should register as claimants with Maurice Blackburn by 22 March 2013. This proposed class closure operated in relation to two separate groups — insurers who had subrogated claims, and group members who were either not insured for economic loss or property damage or were underinsured. If group members or insurers did not register, the proposed orders would preclude them from participating in any putative settlement and if a settlement was reached, they would not be entitled to compensation. Their only recourse would be to make an application to join the class prior to any distribution of funds or oppose any settlement at a settlement approval hearing: at [3]. Forrest J explained that the Supreme Court of Victoria has express power pursuant to s 33ZG to require group members to take a step by a particular date. His Honour noted that s 33ZG specifically enables a court to impose such a requirement prior to a judgment or settlement of a liability issue. It

also enables a court to preclude a group member who fails to take such a step from any relief or financial benefit: at [14]–[15]. Forrest J cited Gillard J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212 at [65], who stated: ‘Under s 33ZG of the Act, the court does have power to make orders which would have the effect of closing the class of claimants and this can be done by a certain date’: at [37]. The defendants opposed Mrs Matthews’ application, arguing that there should be no distinction between group members making an ELPD claim and those making a claim for personal injury or dependency. Forrest J did not agree: at [4]. His Honour considered that class closure orders were more appropriate for the ELPD claims because the damage in those claims had already crystallised and the vast majority, if not all, of the cases concerned adults who could decide whether or not to register. Further, many of the ELPD claims had been subrogated to insurers who, under the proposed orders, were required to register their claims separately and could make an informed decision as to what was in their best interests: at [90]. Forrest J stated that in a number of cases arising out of the Black Saturday bushfires, Supreme Court judges had effected class closure consequent upon settlement of the particular proceeding: at [38]. As such, his Honour held that subject to appropriate notice being given to group members, it was appropriate to redefine the group by requiring the personal injury and dependency claimants to register. Forrest J accepted that without such a course, there would be a significant risk that settlement negotiations would be unable to proceed. However, his Honour did not think that this group, as the defendants suggested, should be subject to [page 566] class closure with termination of their rights absent registration (if settlement was reached). Rather, the class should be converted to a closed class and those who failed to register would be excluded from this proceeding but maintain their right to bring separate proceedings: at [5]. Forrest J was also satisfied that closing the class with binding effect on all class members with ELPD claims was appropriate, provided that adequate

notice was given to the class members: at [6]. As such, his Honour set 22 March 2013 as the date by which group members had to register as claimants with Morris Blackburn: see [2]. Ultimately, Forrest J’s decision demonstrates the court’s willingness to require group members to take active steps to identify themselves, and the nature of their claim, where a class action is at an advanced stage and there is a serious risk that settlement negotiations may not proceed. Courts will, however, take care to ensure that when making class closure orders, vulnerable claimants are not shut out from making claims outside of the class action if they fail to come forward and register.

[page 567]

CHAPTER 37 Order in Event of Decision or Admission on Liability: s 33ZH Supreme Court Act 1986 (Vic) • OVERVIEW • After determining issues of liability, or where there has been an admission by a defendant, the court may order that notice of the decision or admission be given to group members.

• LEGISLATION • Section 33ZH, Supreme Court Act 1986 (Vic) Order in event of decision or admission on liability (1) Without limiting the operation of sections 33ZF and 33ZG, if the Court has made a decision on liability or there has been an admission by the defendant on liability, an order made under section 33ZF may require notice of that decision or admission to be given to group members or a specified class of group members. (2) Subject to subsection (3), the form and content of the notice must be approved by the court. (3) If the Court has made an order of a kind referred to in section 33ZG, the notice must set out the effect of the order. (4) An order under section 33ZF may require that a notice referred to in

this section be given by means of press advertisement, radio or television broadcast, or by any other means.

• COMMENTARY • Extension of General Power in ss 33ZF and 33ZG 37.1 Section 33ZH is a further extension of the power in s 33ZF. Section 33ZF empowers the court to, of its own motion or on application by a party or group member, make any order that the court deems appropriate or necessary to ensure that justice is done in the proceedings. For a detailed discussion of s 33ZF, see Chapter 32. [page 568] Section 33ZH provides that if the court has made a decision on liability or there has been an admission by the defendant on liability, the court can require notice of that decision or admission to be given to group members or a specified class of group members. 37.2 Section 33ZH operates only in the Supreme Court of Victoria, as it is not replicated in the federal, New South Wales or Queensland regimes. However, as the provision is only a clarification of the extent of the power in s 33ZF it is clear that the court would have power in those jurisdictions to make similar orders. Any notice issued pursuant to s 33ZH must be approved by the court. If an order of the kind contemplated by s 33ZH has been made, the notice must set out the effect of the order. This ensures that group members are given notice of the potential extinguishment of their legal rights. For an example of orders made pursuant to s 33ZH, see Woodcroft-Brown v Timbercorp Securities Ltd (in liq) (No 2) [2011] VSC 526.

[page 569]

CHAPTER 38 Transitional Provisions: s 33ZK Supreme Court Act 1986 (Vic) • OVERVIEW • Supreme Court Act 1986 (Vic) s 33ZK is a transitional provision which makes it clear that Pt 4A supersedes the earlier amendment to the Rules and is deemed to have come into effect on 1 January 2000.

• LEGISLATION • Section 33ZK, Supreme Court Act 1986 (Vic) A. Transitional provisions A proceeding commenced under Rule 18A.03 of the Supreme Court (General Civil Procedure) Rules 1996 on or after 1 January 2000 and before the passing of the Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 must be taken for all purposes to have been commenced under this Part on the day on which it was commenced under that Rule.

• COMMENTARY • 38.1

Effective 1 January 2000, the Supreme Court of Victoria first

amended its Rules to provide for a class action procedure. The Supreme Court Act 1986 was subsequently amended to insert Pt 4A into the Act. Section 33ZK makes it clear that Pt 4A supersedes the earlier amendment to the Rules and is deemed to have come into effect on 1 January 2000.

[page 571]

CHAPTER 39 Class Actions Practice Note (GPN-CA) — Federal Court of Australia Class Actions Practice Note (GPN-CA) General Practice Note 1.

Introduction

1.1 This practice note sets out the arrangements for the management of class actions matters within the National Court Framework (“NCF”). It applies to actions commenced under Part IVA of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”) and: (a) it is to be read together with: the Central Practice Note (CPN-1), which sets out the fundamental principles concerning the NCF of the Federal Court and key principles of case management procedure. The Central Practice Note is an essential guide to practice in this Court in all proceedings; Part IVA of the Federal Court Act and Division 9.3 of the Federal Court Rules 2011 (Cth) (“Federal Court Rules”); and any National Practice Area (“NPA”) practice note of the NPA within which the class action is managed, such as the Commercial and Corporations Practice Note (C&C-1). (b) it takes effect from the date it is issued and, to the extent practicable, applies to proceedings whether filed before, or after,

the date of issuing (so far as the circumstances permit); (c) it is intended to set out guiding principles for the conduct of class actions and is not intended to be inflexibly applied; and (d) applies to all class actions. However, practitioners should also familiarise themselves with the General Practice Notes that operate across NPAs (see the further practice information in Part 16 below). 1.2 Taking into account that this practice note uses the common expressions “class action” and “class member” instead of “representative proceeding” and “group member”, words and expressions in this practice note that are defined in Part IVA of the Federal Court Act and r 9.31 of the Federal Court Rules have the meanings given to them in that Part and rule. [page 572] 2.

Objectives

2.1 The aim of this practice note is to: (a) address some of the practical issues which frequently arise in class actions and to indicate the Court’s expectations regarding the management of those issues; and (b) facilitate the efficient and expeditious conduct of class actions, in particular by ensuring that the issues that are in contest are exposed early in the proceeding and that class actions are not unnecessarily delayed by interlocutory disputes. 2.2 A practitioner who anticipates problems in complying with any aspect of this practice note is expected to raise the matter with the Court as early as is practicable. 3.

Commencement of Class Action Proceedings

3.1 A class action is to be commenced by filing an originating

application in accordance with Form 19. The originating application, statement of claim (Form 17) or affidavit (Form 59) filed in support of the application must, in accordance with s 33H of the Federal Court Act: (a) describe or otherwise identify the class members either by name or characteristic; (b) specify the nature of the claims and the relief claimed by the applicant on its own behalf and on behalf of the class members; and (c) specify the common questions of law or fact which are said to arise in the action. It will usually be the case that the concise statement pleadings process contemplated by the Central Practice Note and the Commercial and Corporations Practice Note will be inappropriate for use in class actions. 3.2 The statement of claim should be drawn so that the applicant’s personal claim can be used as the vehicle for determining the common questions in the action. Ordinarily the trial of the action will be aimed at resolving all common questions together with any non-common questions raised by the applicant’s personal claim (eg. the applicant’s individual claim for damages). 4.

Case Management

Allocation of Class Actions 4.1 At an appropriate time soon after filing, the class action will be allocated to a docket judge to conduct a trial of the proceeding (“Docket Judge”). In appropriate cases, a designated case management judge may also be assigned to the proceeding (“Case Management Judge”). [page 573]

The different Judicial Roles 4.2 Where a Case Management Judge has been assigned to a class action, the role of that judge is to conduct the first and subsequent case management hearings so as to case manage the proceeding expeditiously and efficiently, particularly in relation to the interlocutory disputes that commonly arise in class actions. The Case Management Judge will also hear certain applications which may be more appropriately heard by a judge not hearing the trial (eg. depending on the circumstances, certain legal professional privilege disputes). 4.3 The role of the Docket Judge is to preside over the trial of the proceeding, deal with pre-trial issues and, where a Case Management Judge is not assigned, to case manage the proceeding and hear all interlocutory applications therein. 4.4 The Case Management Judge and the Docket Judge will work collaboratively to ensure an efficient and consistent approach to the management of the proceeding, including any interlocutory disputes and the pre-trial and trial phases of the proceeding. The case management process will be flexible and tailored to the particular needs of the case and the parties. 4.5 Taking into consideration these roles the parties should contact, or may be contacted by, the associate of the relevant judge in relation to any case management issue that may be identified. The role of the Class Actions Registrar 4.6 In appropriate cases a registrar of the Court may also be assigned to a class actions proceeding as a Class Actions Registrar. 4.7 If a Class Actions Registrar is assigned, the role of that registrar is to assist the judge or judges and the parties in the proceeding. 5.

Disclosure to Class Members Regarding Costs Agreements and Litigation Funding Agreements

5.1 In this practice note: costs agreement:

means any fee and retainer agreement and costs disclosure

entered into between the applicant’s lawyers and the applicant and/or any class members, whether in standard form or otherwise; litigation funding agreement:

means any agreement by which a litigation funder is to pay or contribute to the costs of the proceeding, any security for costs or any adverse costs order and/or to receive payment of commission, costs or charges of any type in relation to the proceeding,

[page 574] whether by way of third-party or commercial litigation funding or by way of litigation funding provided by some of the class members; legal costs:

means any legal costs and disbursements (including those estimated) to be charged to class members;

litigation funding charges:

any litigation funder’s commission, fees and other charges (including those estimated) to be charged to class members.

5.2 Any costs agreement and litigation funding agreement must be in writing. 5.3 In circumstances where the applicants’ lawyers notify class members (who are clients or potential clients of the applicants’ lawyers) of any applicable legal costs or litigation funding charges the applicant’s lawyers should ensure that the notification is: (a) in clear terms; and (b) is provided as soon as practicable. This is an ongoing obligation and applies to any material changes to the legal costs or litigation funding charges. 5.4 Failure to do so may be taken into account by the Court in relation to settlement approval under s 33V of the Federal Court Act (see paragraph 15.1 below). 5.5 The obligation on the part of the applicant’s lawyers to notify class members of any applicable litigation funding charges is satisfied if

class members have been provided a document that properly discloses those charges. 5.6 When notifying class members of any applicable legal costs in accordance with paragraph 5.3 above, the applicant’s lawyers should bear in mind that there are various categories of legal costs which may arise in class actions. These may include: (a) common benefit costs, being costs incurred in connection with the common questions in the proceeding or in managing the proceeding for the benefit of the class overall; (b) sub-group costs, being costs incurred for the common benefit of the sub-group whose claims raise sub-group question(s); (c) individual costs, being costs incurred in connection with issues which are individual to particular class members (eg. individual damages assessments); and (d) any “uplift” which the applicant’s lawyers intend to charge (where permitted by applicable professional practice rules or regulations). 5.7 The applicant’s lawyers should also bear in mind that the recoverability of legal costs in class actions is affected by: (a) section 43(1A) of the Federal Court Act, which limits the circumstances in which costs orders may be made against class members; [page 575] (b) section 33ZJ of the Federal Court Act, which permits orders requiring that any damages awarded to class members be applied to reimburse the representative applicant for legal costs incurred by the applicant but not recovered from the respondent(s); and (c) sections 33V(2) and 33ZF of the Federal Court Act, which permit orders requiring that settlement payments be applied to reimburse the representative applicant for unrecovered legal costs.

5.8 When notifying class members of legal costs the applicant’s lawyers should provide information in relation to the applicable categories of legal costs and the different situations in which class members may be required to meet a share of unrecovered costs. Conflicts of Interest 5.9 Any costs agreement or litigation funding agreement should include provisions for managing conflicts of interest (including of “duty and interest” and “duty and duty”) between any of the applicant(s), the class members, the applicant’s lawyers and any litigation funder. 5.10 The applicant’s lawyers have a continuing obligation to recognise and properly manage any such conflicts throughout the proceeding. 6.

Disclosure of Costs Agreements and Agreements to the Court and Other Parties

Litigation

Funding

Confidential Disclosure to the Court 6.1 Subject to any objection, prior to the first case management hearing the applicant’s lawyers shall, on a confidential basis, email the costs agreement and any litigation funding agreement to the associate of the judge presiding over the first case management hearing with both the email and the agreements clearly marked “Confidential for the Court only (per Class Action Practice Note, paragraph 6.1)”. 6.2 The provision of such agreements to the Court may be limited to an example of the standard form of each agreement, and need not include individual variations to the standard forms that might be negotiated with different class members. 6.3 Subject to any objection, the applicant’s lawyers shall email to chambers any updated costs agreement and/or litigation funding agreement on the same confidential basis as soon as practicable after the applicant’s lawyer become aware that: (a) there is a change to the standard form of litigation funding agreement or costs agreement which significantly alters the agreement; (b) a proceeding not previously subject to a litigation funding

agreement becomes subject to such an agreement; [page 576] (c) there is a change of the litigation funder funding the proceeding; or (d) the litigation funder becomes insolvent or otherwise unable or unwilling to continue to provide funding for the proceeding. (i) Disclosure of Litigation Funding Agreements to other parties 6.4 Subject to any objection, no later than 7 days prior to the first case management hearing, the applicant’s lawyers shall file and serve a notice in accordance with the “Notice of Disclosure - Litigation Funding Agreements” together with a copy of the litigation funding agreement. Such disclosure may: (a) be limited to an example of the standard form of the agreement, and need not include individual variations to the standard form that might be negotiated with different class members; (b) be redacted to conceal any information which might reasonably be expected to confer a tactical advantage on another party to the proceeding including, without limitation, information: (i) as to the budget or estimate of costs for the litigation or the funds available to the applicants, in total or for any step or stage in the proceeding; (ii) which might reasonably be expected to indicate an assessment of the risks or merits of the proceeding or any claim in, or aspect of, the proceeding. 6.5 Subject to any objection, the applicant’s lawyers shall file and serve an updated Notice of Disclosure (with any appropriate redactions), in the event that the lawyer becomes aware of any of the circumstances set out in paragraph 6.3 above. Objection to Disclosure

6.6 Where a question of legal professional privilege, prejudice or other significant detriment arises in making any disclosure under Part 6 of this practice note, the applicants’ lawyers may object in whole or in part to the requirement to make such disclosure or alternatively propose a sensible redaction process. 6.7 Where such an objection is sought to be made, it should be raised with the Court and with other parties, with concise reasons provided, in writing no later than 7 days prior to the first case management hearing. The matter will then be substantively addressed at a hearing. 7.

First Case Management Hearing

7.1 The first case management hearing will ordinarily be fixed for a date within 8 weeks from the date on which the application is filed, and the date will be noted on the application. The extended time allowed prior to the first [page 577] case management hearing reflects the fact that class actions are often large and complex and the matters to be dealt with will require the parties to undertake a significant amount of case preparation. 7.2 If there is any genuine reason why a party may be unable to participate meaningfully in the first case management hearing on the date fixed, that party should liaise with all other parties about that as soon as practicable before that hearing. Where appropriate, the parties may approach the associate of the judge hearing the first case management hearing to propose a later date. 7.3 The parties are encouraged to file a joint position paper in advance of the first case management hearing, listing the major points the parties anticipate raising and outlining their respective positions on these points, with each one summarised in no more than 3 sentences. 7.4 The first case management hearing may, if it is appropriate, be

conducted along relatively informal lines. In that event, the emphasis will usually be on an “exchange” between all participants (rather than having only counsel speaking and then only in a fixed sequence). The lawyer with primary responsibility for the proceeding within the applicant’s and respondent’s law firms must attend. Matters to be dealt with at the First Case Management Hearing 7.5 This section should be read together with the Central Practice Note in regard to case management hearings (see Part 8 of the Central Practice Note, including the obligation to communicate with other parties in advance of a case management hearing in paragraph 8.6). 7.6 At the first case management hearing the parties will be asked to outline the issues and facts that appear to be in dispute. 7.7 Unless specific disclosure in accordance with Parts 5 and 6 above has already been made, the question of the disclosure requirements and any issues arising, including any objections, will be substantively addressed. 7.8 In addition, the parties should be in a position to address the following: (a) any issues regarding the description of class members (see ss 33C(1) and 33H(1) of the Federal Court Act); (b) a timetable for the delivery of a defence; (c) any pleading issues; (d) discovery, including the utility of orders for the provision of affidavits by any party as to where relevant documents are stored, what types of documents exist, in what form they are held, and the likely timetable and costs consequences of making discovery of particular categories of documents; (e) whether the respondent proposes to seek an order for security for costs; (f) the timetabling of any interlocutory applications; [page 578]

(g) the timetabling of a further case management hearing to deal with other issues; and (h) any of the matters set out in paragraph 8.2 below where the parties are in a position to address such matters at the first case management hearing. 7.9 The Court will fix dates as early as are practicable for the filing, service and return of any interlocutory application, and endeavour to deal with such applications on an expedited basis. 7.10 Any interlocutory application that is not filed and served within the time required must not subsequently be filed without leave of the Court. 7.11 The Court will endeavour to give judgment on any interlocutory application within 6 weeks of the interlocutory hearing. 8.

Subsequent Case Management Hearings

8.1 This section should be read together with the Central Practice Note in regard to further interlocutory steps (see Part 12 of the Central Practice Note, including the obligation to communicate with other parties in advance of any interlocutory application in paragraph 12.2 of the Central Practice Note). 8.2 The complexity of class actions means that there may be a need for a number of case management hearings to deal with issues, including the following: (a) issues put over from the first case management hearing; (b) discovery; (c) whether the matter should be referred for alternative dispute resolution (“ADR”) and, if so, a timetable within which the ADR process might proceed. Mediation, and informationsharing in that context, is likely to be considered proactively (see Part 9 of this practice note); (d) the joinder of additional parties; (e) whether or not sub-groups should be formed or sample class

(f) (g) (h) (i) (j)

(k)

members put forward; the timing and form of the opt out notice; methods of communicating with non-client class members; whether there is utility in the use of sample class members; the common and other questions for trial; if appropriate, determining any common question as a preliminary question (r 30.01 of the Federal Court Rules) or giving summary judgment on any common question (s 31A of the Federal Court Act); whether it is appropriate to refer any one or more of the common questions to a Full Court pursuant to s 20(1A) of the Federal Court Act; [page 579]

(l) the appropriateness of a split trial. It is usual for the common questions, together with such part of the applicant’s case as is appropriate to decide at that stage, to be heard in an initial trial. Consideration should be given to whether the whole of the applicant’s case should be heard at the initial trial or whether it is appropriate to hear and determine one or more separate questions at that trial; (m) the provision of expert reports and production of joint expert reports, conferences of experts and the use of concurrent evidence at trial (see also the Expert Evidence Practice Note (GPN-EXPT)); (n) the possible use of referees (under s 54A of the Federal Court Act); and (o) the mode of conducting the trial (eg. whether it is to be an eTrial, whether witness statements will be used etc). 9.

Mediation and ADR

9.1 The Court expects that the parties will mediate (or utilise other ADR processes) to resolve the claims of the applicant and class members on one or more occasions in the course of the action. Registrars of the Court are experienced in assisting the parties to achieve settlement through mediation. 9.2 There are often obstacles to the settlement of class actions which are not present in other types of litigation. For example, it is often the case that documents material to the issue of liability are not available to the applicant and class members, and the number of class members interested in participating in the class action and the quantum of claims made by them is not known and cannot readily be assessed by the respondent. 9.3 At an early stage in the proceeding the parties should take steps to establish the methods by which relevant information might be gathered and exchanged which, without compromising the utility of the class action procedure, would assist the parties to have settlement discussions which are as informed as possible. The Court will make such directions, including directions in relation to information sharing in a mediation or other ADR process, as it considers appropriate. 9.4 After the close of pleadings the Court will hold a case management hearing for the purpose of investigating steps for the settlement of the claims, including scheduling an appropriate ADR process to assist in achieving the overarching purpose. 10. Communications With Class Members 10.1 Unless leave is granted by the Court, if a class member is a client of the applicant’s lawyers then any communication with the class member by the respondent or the respondent’s lawyers or agents in relation to the proceeding [page 580]

shall only be through the applicant’s lawyers. However, there is no intention to limit the respondent’s communication with class members in the ordinary course of business. Where the respondent’s lawyers are uncertain as to whether the class member is a client of the applicant they should liaise with the applicant’s lawyers to clarify the status of the class member, before any communication takes place. In an appropriate case, the Court may make an order that the applicant’s lawyers inform the other parties whether class members are clients of those lawyers. 10.2 The Court may make orders concerning communications with class members who are not clients of the applicant’s lawyers, including establishing a protocol for such communications. Where class members are not clients of the applicant’s lawyers then the respondent and its lawyers or agents should use reasonable endeavours to ensure that any communications with class members in relation to the proceeding are in writing. 10.3 Where a respondent and/or its lawyers or agents communicate with a non-client class member suggesting that the class member do or not do something, the communication should, in plain language, explain the consequences of following the suggestion and encourage the nonclient class member to obtain legal advice. 11. Opt Out Notice 11.1 Class members may opt out of a class action by giving a written opt out notice to the Court by a date which must be fixed for that purpose by the Court (see s 33J of the Federal Court Act). An opt out notice must comply with Form 21 (see r 9.34 of the Federal Court Rules). 11.2 The applicant’s lawyers should ensure that the opt out notice: (a) uses plain language and gives a balanced, succinct description of the claims and defences in the proceeding; (b) clearly describes the consequences of remaining a class member or alternatively opting out of the proceeding, including a

succinct explanation of how a judgment or settlement in the proceeding will or may preclude class members from relying on the same or related claims or defences in other proceedings; (c) alerts class members to the fact and consequences of any costs agreement or litigation funding agreement made or intended for the proceeding; (d) is sent, published or broadcast via media which are best calculated to achieve the effective dissemination of the notices among class members in the most cost-effective way. A sample form of such an opt out notice is available on the Court’s website. It may be appropriate in some cases to use a shorter form of notice. 11.3 Where the class members are, or are likely to be, identifiable from a respondent’s records (for example, shareholders of a respondent [page 581] corporation or unitholders in a managed investment scheme) then the parties should, subject to any clear statutory or legal obligations requiring otherwise, cooperate with a view to using the respondent’s records as the basis for a direct mail or email distribution of notices, whether by the applicant, by the respondent or by a third party (for example, a commercial mail house). 11.4 An objection to the use of the respondent’s records to assist the opt out process in this way must be advised by the respondent to the applicant’s lawyer at the earliest practicable opportunity. The parties should engage in a genuine effort to resolve the issue in a practical way before agitating the issue before the Court. 11.5 The Court will approve an appropriate manner of distribution of the notice to be given to class members informing them of the commencement of the class action, and of their right to opt out of the proceeding by the date that the Court has fixed (see ss 33X(1)(a), 33X(2) and 33Y of the Federal Court Act).

11.6 The timing of the opt out notice to class members is a matter to be dealt with at a case management hearing. 12. Initial Trial - Trial of Common Questions 12.1 In an appropriate case (and appropriateness will be determined by practical as well as legal considerations) the trial may be split so that common issues together with non-common issues concerning liability may be determined first. Such a trial may be structured to address: (a) the issues raised by the claim of the representative applicant(s), namely the common questions as well as the individual issues relating to the representative applicant(s) including any individual claims for damages; and (b) issues common to sub-groups which also might efficiently be addressed at the initial trial. 12.2 Unless the Court makes orders under ss 33Q or 33R of the Federal Court Act, “sample” class members whose claims are presented at a split trial will retain their status as class members for the purposes of s 43(1A) of the Federal Court Act. 12.3 Following a trial on issues of liability it will be necessary to decide whether the individual claims of class members will be determined within the existing proceeding (eg. under ss 33Q or 33R of the Federal Court Act) or determined in separate proceedings (s 33S of the Federal Court Act). 13. Settlement - Requirement for Court Approval 13.1 A class action may not be settled or discontinued without the approval of the Court (see s 33V(1) of the Federal Court Act). If the Court gives its [page 582]

approval to a settlement, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court (see s 33V(2) of the Federal Court Act; note also ss 33ZF and 33ZJ). 13.2 The Court will usually not determine an application for approval of a settlement unless a notice, approved by the Court, has been given to the class members (see ss 33X(4) and 33Y of the Federal Court Act). 14. Settlement - Procedure 14.1 An application for the Court’s approval of a proposed settlement must be made by interlocutory application. The orders which are commonly made on such an application include orders for: (a) at the first return of the application: (i) the confidentiality of evidence to be filed in support of the application for approval; (ii) the timetable for any person to file evidence in respect of the application for approval; and (iii) Court approval of a notice to class members of the proposed settlement. (b) at the second return of the application, Court approval of: (i) the proposed settlement; (ii) any scheme for distribution of any settlement payment; and (iii) arrangements for the reimbursement of any costs incurred by the applicant(s) but not recovered from the respondents. (c) following the completion of any settlement distribution scheme - disposing of the proceeding (eg. by dismissing the application). 14.2 Notice of the proposed settlement will usually be required to be given to class members. The notice should usually include the following: (a) a statement that the class members have legal rights that may be affected by the proposed settlement; (b) a statement that an individual class member may be affected by a decision whether or not to remain as a class member (in the

(c) (d) (e) (f) (g)

event that the opt-out date has not already passed or where there is a further opportunity to opt out); a brief description of the factual circumstances giving rise to the litigation; a description of the legal basis of the claims made in the proceedings and the nature of relief sought; a description of the class on whose behalf the proceedings were commenced; information on how a copy of the statement of claim and other legal documents may be obtained; a summary of the terms of the proposed settlement; [page 583]

(h) information as to any “funding equalisation payment” which affects the ultimate settlement amount received by class members who have not entered into a litigation funding agreement; (i) information on how to obtain a copy of the settlement agreement (except where confidentiality provisions in the settlement agreement preclude disclosure at that time); (j) an explanation of who will benefit from the settlement, including an explanation as to how class members or sub-groups will benefit relative to each other; (k) where all class members are not eligible for settlement benefits an explanation of who will not be eligible and the reasons for such ineligibility; (l) an explanation of the Court settlement approval process; (m) details of when and where the Court hearing will be and a statement that the class member may attend the Court hearing; (n) an outline of how objections or expressions of support may be communicated, either in writing or by appearing in person or

through a legal representative at the hearing; (o) an outline of any steps required to be taken by persons who wish to participate in the settlement (in the event that affirmative steps are required); (p) an outline of the steps required to be taken by persons wishing to opt out of the settlement (if that is possible under the terms of the settlement); and (q) information on how to obtain legal advice and assistance. 14.3 When applying for Court approval of a settlement, the parties will usually need to persuade the Court that: (a) the proposed settlement is fair and reasonable having regard to the claims made on behalf of the class members who will be bound by the settlement; and (b) the proposed settlement has been undertaken in the interests of class members, as well as those of the applicant, and not just in the interests of the applicant and the respondent(s). 14.4 The material filed in support of an application for Court approval of a settlement will usually be required to address at least the following factors: (a) the complexity and likely duration of the litigation; (b) the reaction of the class to the settlement; (c) the stage of the proceedings; (d) the risks of establishing liability; (e) the risks of establishing loss or damage; (f) the risks of maintaining a class action; (g) the ability of the respondent to withstand a greater judgment; [page 584] (h) the range of reasonableness of the settlement in light of the best recovery; (i) the range of reasonableness of the settlement in light of all the

attendant risks of litigation; and (j) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding. 14.5 To the extent relevant, the affidavit or affidavits in support of the application for Court approval should state: (a) how the settlement complies with the criteria for approving a settlement; (b) why the proceeding has been settled on particular terms; (c) the effect of those terms on class members (ie. the quantum of damages they are to receive in exchange for ceasing to pursue their claims and whether class members are treated the same or differently and why); (d) the means of distributing settlement funds; (e) the time at which it is anticipated settlement funds will be received by class members; (f) the frequency of any post-approval report(s) to be provided to the Court regarding the distribution of settlement funds; (g) the terms of the costs agreement including the reasonableness of legal costs; (h) the terms of any litigation funding agreement and its application if the settlement is approved; (i) a response to any arguments against approval of settlement raised by class members; and (j) any issues that the Court directs be addressed. 14.6 The Court will require to be advised at regular intervals of the performance of the settlement (including any steps in the settlement distribution scheme) and the costs incurred in administering the settlement in order that it may be satisfied that distribution of settlement monies to the applicant and class members occurs as efficiently and expeditiously as practicable. 15. Court Supervision of Deductions for Legal Costs or Litigation

Funding Charges 15.1 Where a proposed settlement contemplates that any part of the payments to be made to class members will be applied toward reimbursement of the unrecovered legal costs of the proceeding, or toward payment of litigation funding charges, the Court will usually require that the material filed in support of the application should demonstrate: [page 585] (a) that reasonable steps were taken to alert class members to the likelihood of such deductions as soon as practicable after that became apparent, so that class members were, at the relevant time, able to take such steps as may have been practicably available to them to negotiate as to legal costs or as to litigation funding charges as applicable, or to remove themselves from the class action; and (b) that the amounts to be deducted have been calculated in accordance with the terms of the costs agreement and any litigation funding agreement. 15.2 It will usually be sufficient that an independent expert has examined the relevant files or records of the applicant’s lawyer and any litigation funder and that: (a) in relation to legal costs the expert: (i) has examined a sufficient sample of the legal work recorded to clarify whether the work was properly costed in accordance with applicable costs agreements; and (ii) expresses an expert opinion, by reference to the sample and the expert’s experience of comparable litigation, as to whether the total legal costs claimed are fair and reasonable; and (b) in relation to litigation funding charges, the expert has

examined the litigation funder’s records in order to provide assurance to the Court that the litigation funding charges, as calculated, are appropriate having regard to the terms of the litigation funding agreement. 15.3 Lawyers should expect that a more extensive sampling of legal costs, a greater level of examination by an independent expert, or a more extensive examination of the litigation funder’s records may be required where: (a) the class members include persons who are not clients of the applicant’s lawyers or of the litigation funder; (b) the deduction per class member constitutes a significant proportion of the settlement amount otherwise payable to each class member; or (c) the litigation funder imposes charges beyond the percentage commission set out in the litigation funding agreement (eg. project management fees). 15.4 Where any application for Court approval of a proposed settlement or settlement distribution scheme involves an evaluation as to whether the legal costs incurred on behalf of the class members are reasonable, the Court may: (a) have regard to the corresponding legal costs incurred by the respondent to the action; and (b) make such orders for the confidentiality of the applicant’s legal costs or a respondent’s legal costs as may be appropriate. [page 586] 16. Further Practice Information and Resources 16.1 The following key documents are relevant to class actions matters and are available from the Court’s website: (a) Notice of Disclosure - Litigation Funding Agreements; (b) Sample Opt Out Notice (including sample Form 21 – Opt Out

Notice); (c) Federal Court Form 21, Opt Out Notice. 16.2 Practitioners should also familiarise themselves with the General Practice Notes of the Court. The following practice notes can be of particular relevance to class actions: Expert Evidence Practice Note (GPN-EXPT), Survey Evidence Practice Note (GPN-SURV) and Subpoenas and Notices to Produce Practice Note (GPN-SUBP). These general practice notes and all of the Court’s practice notes are available on the court’s website. 16.3 Further information to assist litigants, including a range of helpful guides, is also available on the Court’s website. This information may be particularly helpful for litigants who are representing themselves. 16.4 In addition, further practice and procedure information and resources can be found on the Court’s class actions webpage. J L B ALLSOP Chief Justice 25 October 2016

[page 587]

CHAPTER 40 Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) — Supreme Court of Victoria Practice Note SC Gen 10 Conduct of Group Proceedings (Class Actions) 1.

Introduction

1.1 The Chief Justice has authorised the issue of the following Practice Note. 1.2 The purpose of this Practice Note is to provide guidance on the management and conduct of group proceedings (class actions) managed within the Supreme Court of Victoria in the Common Law Division and the Commercial Court. 1.3 The procedures for the management of group proceedings are generally the same in each Division. Where different procedures apply, they are clearly stipulated in this Practice Note. 2.

Commencement

2.1 This Practice Note was issued on 30 January 2017 and commences on 30 January 2017 and applies to relevant proceedings commenced in the Common Law Division and the Commercial Court. 3.

Definitions

3.1 In this Practice Note: Act means the Supreme Court Act 1986 case management Judge means (a) if the matter has been allocated to a Judge for trial, the trial Judge; or (b) if the matters has not been allocated to a Judge for trial the List Judge for the Commercial Court List to which the proceeding has been allocated; or for Common Law Division matters the Judge in charge of the Major Torts List. CMC means case management conference [page 588] 4.

Commencement of Proceedings

4.1 A group proceeding is to be commenced by writ in accordance with s 33H of the Act. The endorsement on the writ must, in accordance with s 33H of the Act: (a) describe or otherwise identify the group members to whom the proceeding relates, (b) specify the nature of the claims made on behalf of the group members and the relief claimed, and (c) specify the common questions of law or fact to the claims of the group members. 4.2 The statement of claim should be drawn so that the Plaintiff’s personal claim can be used as the vehicle for determining the common questions in the action. Ordinarily the trial of the action will resolve all common questions together with any non-common questions raised by the Plaintiff’s personal claim. 4.3 Commercial Court group proceedings should not be initiated on RedCrest without prior consultation with the Commercial Court Group Proceedings Coordinator ([email protected]).

4.4 When the writ is filed, and when appearances are filed and served, the filing party should email a copy to the Common Law Class Actions Coordinator ([email protected]) for Common Law proceedings, or to the Commercial Court Group Proceedings Coordinator ([email protected]) for Commercial Court proceedings (as the case may be). This is to initiate the listing of an initial case management conference for Common Law proceedings, or first directions hearing for Commercial Court proceedings. 5.

Management of Group Proceedings

5.1 Group proceedings in the Common Law Division will be initially managed by the Judge in charge of the Major Torts List and thereafter by the allocated trial judge, with the assistance of an Associate Judge as necessary, to ensure that matters are dealt with expeditiously and efficiently. 5.2 Group proceedings in the Commercial Court will be managed by the List Judge to whom the proceeding is allocated, with the assistance of an Associate Judge in appropriate cases. The Court may, of its own motion, enter a proceeding into a Judge-managed List in the Commercial Court, to ensure that matters are dealt with expeditiously and efficiently. 5.3 For Common Law proceedings the following procedure will take place upon the filing of the writ: An initial CMC will be fixed by the case management Judge for a date within six weeks from the date on which the writ is filed. The initial CMC will take place before the case management Judge. 5.4 For Commercial Court proceedings, the following procedure applies: [page 589]

Shortly after commencement, the group proceeding will be allocated to a List Judge for management. A first directions hearing will take place before the List Judge, within six weeks of the writ being filed, or upon the filing of appearances and an initial defence. 5.5 CMCs or first directions hearings will, insofar as it is appropriate, be conducted along relatively informal lines. Rather than the hearing occurring in a fixed sequence with counsel making submissions in turn, the emphasis will be on an ‘exchange’ between counsel and the case management Judge. 5.6 The practitioners with primary responsibility for carriage of the proceedings within each party’s law firms are expected to attend the CMC or directions hearing. 5.7 At the initial CMC or directions hearing, the parties will be asked to outline the issues and facts that appear to be in dispute and to state whether any party intends to adduce expert evidence at trial. Usually, the parties will also be asked to indicate whether the matter should be referred for alternative dispute resolution and, if so, about a timetable within which the alternative dispute resolution might proceed. 5.8 In addition, the parties should be in a position to address the following: (a) any issues regarding the description of group members; (b) any pleading issues; (c) discovery, including the utility of orders for the provision of affidavits by any party as to where relevant documents are stored, what types of documents exist (from high level down to particular), in what form they are held, and the costs of making discovery of particular categories of documents; (d) evidence, including the utility of requiring that affidavits of lay or expert witnesses be filed at an early stage of the proceeding to enable a better understanding of the issues in dispute and the proper identification of individual and common questions;

(e) the joinder of additional parties; (f) to the extent possible, the appropriateness of a split trial and the issues to be determined at a split trial; (g) whether the Defendant proposes to seek an order for security for costs; (h) the timetabling of any applications for resolving interlocutory matters; (i) methods of communicating with unrepresented group members; and (j) any need to relist or continue the CMC or directions hearing on either the following day or at some other suitable time. 5.9 During the progress of the proceeding the Court will direct as necessary that there be further CMCs or directions hearings. Issues that may be raised at such a hearing include the following: (a) any application for class closure; (b) the timing and form of any opt out notice; [page 590] (c) any continuing discovery issues, including the utility of a discovery conference between the parties or their legal representatives, with or without the assistance of an Associate Judge, Judicial Registrar or other suitably qualified person; (d) preparation of a statement of issues; (e) briefing experts, the provision of expert reports and production of joint expert reports; (f) conferences or conclaves of experts, with or without the assistance of an Associate Judge, Judicial Registrar or other suitably qualified person; (g) the use of concurrent evidence at trial; (h) whether there is utility in the use of sample group members; (i) the possible use of special assessors or special referees; and

(j) the mode of conducting the trial, e.g. whether it is to be an electronic trial, whether witness statements will be used, and any application to change the mode of trial from a jury trial to judge alone or vice versa. 5.10 The parties are encouraged to file a joint position paper at least 48 hours prior to each CMC or directions hearing, listing the major points the parties anticipate raising and outlining their respective positions on each issue in one to three sentences. 5.11 In proceedings involving a large number of parties, practitioners may be requested to provide the Court with a table of appearances, listed by party and their respective representatives, prior to each CMC or directions hearing. 6.

Applications

6.1 Before making any interlocutory application, the parties’ representatives must confer and attempt in good faith to resolve the dispute. 6.2 The Court will fix dates as early as practicable for the filing, service and return of any application which may include but is not limited to an application: (a) challenging the commencement of the proceeding as a group proceeding; (b) seeking an order modifying or removing the group character of the action; (c) seeking summary dismissal; (d) seeking a striking out; (e) seeking an order that the Plaintiff provide security for costs; (f) seeking an order in relation to communication with group members by the parties; (g) seeking an order for discovery; or (h) seeking an order in relation to the mode of trial and/or place of trial.

[page 591] 6.3 In respect of any such application, it will be necessary for a party to issue a summons. Return dates for summonses may be obtained from the associate to the case management Judge or the List Judge (as the case may be). 6.4 The Plaintiff must file any supporting material to the application, including affidavits, exhibits and outlines of argument, with the Court no later than 4.00pm ten clear business days before the return date. 6.5 The Respondent must file any response material, including affidavits, exhibits and outlines of argument, with the Court no later than 4.00pm five clear business days before the return date. 6.6 The case management Judge may refer an application or class of applications in the proceeding to an Associate Judge. 7.

Urgent Applications in the Commercial Court

7.1 Applications of an urgent nature which may arise in a Commercial Court group proceeding already entered into a Judge managed List should be brought in the first instance by contacting the associate to the List Judge. 7.2 If the proceeding has not yet been allocated, urgent relief can be sought via the Commercial Court urgent application procedure, by contacting (03) 9603 4105 and by email at [email protected]. 7.3 If urgent relief is required outside ordinary business hours, a hearing before the Commercial Court Duty Judge may be initiated by calling the ‘urgent applications’ telephone number notified on the Commercial Court page of the Supreme Court website. 7.4 In addition, any application of an urgent nature which may arise in the group proceeding must be promptly brought to the attention of the Commercial Group Proceeding Coordinator and to the associate to the List Judge. Urgent applications in Commercial Court group

proceedings should not be brought in the Practice Court. 8.

Communications with Group Members

8.1 In an appropriate case, the Court may make an order that the Plaintiff’s solicitors inform the other parties whether group members are its clients. The Court may make orders concerning communications with group members who are not clients of the Plaintiff’s solicitors. 8.2 In an appropriate case the Court may make orders establishing a protocol for communications between parties and such group members. 9.

Opt out Procedures

9.1 Group members may opt out of a group proceeding by giving a written opt out notice to the Court by a date which must be fixed for that purpose by [page 592] the Court. The form of the opt out notice to be given by a group member is prescribed by the Supreme Court Rules: see O 18A.04 and Form 18AB. 9.2 The usual practice is to send such notices to group members shortly after the close of pleadings. The Court will encourage the parties to discuss the appropriate form of the notice at the earliest opportunity. In any event, no such notice is to be given to group members without prior direction or order of the Court. 9.3 The Court may approve the form, content and manner of distribution of the notice to be given to group members informing them of the commencement of the group proceeding, of their right to opt out of the proceeding by the date that the Court has fixed, and the possible implications to a group member of not opting out.

9.4 Opt out notices must be addressed as follows: An opt out notice in a Common Law Division group proceeding will specify delivery of the completed notice to the Prothonotary at the Principal Registry of the Supreme Court, located at 436 Lonsdale Street, Melbourne. By contrast, an opt out notice in a Commercial Court group proceeding will specify delivery of the completed notice to the Prothonotary, care of the Commercial Court Registry located at 450 Little Bourke Street, Melbourne. 9.5 The Court may request that the Plaintiff’s solicitors indicate the approximate size of the group, including an estimate of the number of group members, to enable the Court to appropriately manage the volume of opt out notices that may be received. 10. Preliminary Questions and Summary Judgment 10.1 To narrow the scope of the dispute, at the earliest practicable date the Court may consider the utility of either: (a) determining any common question in the proceeding as a preliminary question; or (b) giving summary judgment on any common question in the proceeding. 11. Trial of Common Questions 11.1 In an appropriate case the trial may be split so that common issues together with non-common issues concerning liability may be determined first. Appropriateness will be determined by practical as well as legal considerations. 11.2 In framing the issues to go to trial, the parties’ lawyers should consider whether there are issues common to subgroups which also might efficiently be addressed at the initial trial. Unless the Court makes orders otherwise,

[page 593] group members whose claims are presented at a split trial will retain their status as group members for the purposes of s 33ZD of the Act. 11.3 Following a trial on issues of liability it will be necessary to decide whether the individual claims of group members will be determined within the existing proceeding or determined in separate proceedings. 12. Settlement 12.1 A group proceeding may not be settled or discontinued without the approval of the Court. If the Court gives its approval to a settlement, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court. 12.2 Unless the Court is satisfied that it is just to do so, it will not determine an application for approval of a settlement unless a notice, approved by the Court, has been given to the group members. 13. Court Approval of Settlement 13.1 When applying for Court approval of a settlement, the parties will usually need to persuade the Court that: the proposed settlement is fair and reasonable having regard to the claims made on behalf of the group members who will be bound by the settlement; and the proposed settlement has been undertaken in the interests of group members, as well as those of the Plaintiff, and not just in the interests of the Plaintiff and the Defendant/s. 13.2 An application for approval of a settlement will not ordinarily be heard by the case management Judge. Prior to any settlement approval application being made, directions must be sought from the case management Judge with respect to such application, including in relation to the filing of any supporting material.

13.3 When applying for Court approval of a settlement, the parties will usually be required to address at least the following factors: (a) the complexity and likely duration of the litigation; (b) the reaction of the group to the settlement; (c) the stage of the proceedings; (d) the likelihood of establishing liability; (e) the likelihood of establishing loss or damage; (f) the risks of maintaining a group proceeding; (g) the ability of the Defendant to withstand a greater judgment; (h) the range of reasonableness of the settlement in light of the best recovery; [page 594] (i) the range of reasonableness of the settlement in light of all the attendant risks of litigation; and (j) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding. 13.4 A request for the Court’s approval of a proposed settlement must be made by application. The orders which are commonly made on such an application include orders: (a) for the confidentiality of evidence; (b) for notice to group members of the proposed settlement; (c) approving any scheme for distribution of any settlement payment; and (d) disposing of the proceeding (e.g. by dismissing the application). 13.5 To the extent relevant, the affidavit or affidavits in support should address: (a) how the settlement complies with the criteria for approving a settlement;

(b) why the proceedings have been settled on particular terms; (c) the effect of those terms on group members (i.e. the quantum of damages they are to receive in exchange for ceasing to pursue their claims and whether group members are treated the same or differently and why); (d) how the settlement process will be administered, supervised, monitored or audited; (e) the terms of fee and retainer agreements including the reasonableness of legal costs; (f) a response to any arguments against approval of settlement raised by group members; (g) any issues that the Court directs be addressed; and (h) a hearing of the application for settlement approval, including consideration of any group members’ objections to the settlement and an order dealing with costs. 13.6 When it is appropriate that notice of the proposed settlement be given to group members, the notice should include the following: (a) a statement that the group members have legal rights that may be affected by the proposed settlement; (b) a statement that an individual group member may be affected by a decision whether or not to remain as a group member (where the opt-out date has not already passed or where there is a further opportunity to opt out); (c) a brief description of the factual circumstances giving rise to the litigation; (d) a description of the legal basis of the claims made in the proceedings and the nature of relief sought; [page 595] (e) a description of the group on whose behalf the proceedings were commenced;

(f) information on how a copy of the statement of claim and other legal documents may be obtained; (g) a summary of the terms of the proposed settlement; (h) information on how to obtain a copy of the settlement agreement; (i) an explanation of who will benefit from the settlement; (j) where all group members are not eligible for settlement benefits - an explanation of who will not be eligible and the reasons for such ineligibility; (k) an explanation of the Court settlement approval process; (l) details of when and where the Court hearing will be and a statement that the group member may attend the Court hearing; (m) an outline of how objections or expressions of support may be communicated, either in writing or by appearing in person or through a legal representative at the hearing; (n) an outline of any steps required to be taken by persons who wish to participate in the settlement (in the event that affirmative steps are required); (o) an outline of the steps required to be taken by persons wishing to opt out of the settlement if that is possible under the terms of the settlement; and (p) information on how to obtain legal advice and assistance. 14. Communications with the Court 14.1 At all stages of the proceeding, communications with the Court should be by email with a copy to all other parties, and should be confined to uncontroversial matters. 14.2 All correspondence regarding group proceedings within the Common Law Division should be provided to the Class Actions Coordinator ([email protected]). 14.3 All correspondence regarding group proceedings within the Commercial Court should be provided to the Commercial Court Group Proceedings Coordinator

([email protected]). Vivienne Macgillivray Executive Associate to the Chief Justice 30 January 2017

[page 597]

CHAPTER 41 Practice Note SC Gen 17 — Supreme Court Representative Proceedings — Supreme Court of New South Wales Practice Note No. SC Gen 17 Supreme Court - Representative Proceedings Introduction Representative proceedings under Part 10 of the Civil Procedure Act 2005 (NSW) commonly described as class actions present complexities which are unique compared to other forms of civil and commercial litigation. This Practice Note is designed to facilitate the management of representative proceedings. There are a number of features which are designed to assist in their prompt and efficient resolution. In particular the provisions of SC Gen 9, SC Gen 10, SC Gen 11, SC CL 5, SC CL 7, SC Eq 5 and SC Eq 11 will not apply save to the extent the judge managing particular proceedings orders to the contrary. This is to provide maximum flexibility in bringing the proceedings to trial and their prompt disposal at trial. The proceedings will be assigned on their commencement to one of the judges on the panel of judges who will hear representative actions. The panel of judges of the Common Law Division is as follows: Hoeben CJ at CL, Garling J and Beech-Jones J. Class actions commenced in the Equity Division will henceforth be

assigned to the Commercial List. Such actions will be case managed either by the judge administering the List (Hammerschlag J), Ball J or Sackar J and will be heard by either one of those judges, Ward CJ in Eq, or one of the other judges assigned to the Commercial List. Judges who are assigned to manage the proceedings will determine any common questions that may arise and give directions for the determination of the remaining questions. [page 598] Representative proceedings will be managed by way of case conferences, which will be a more informal procedure than a directions hearing. This is designed to promote discussion between the parties and the judge to whom the proceedings are assigned with a view to exploring the best method of bringing the case to a hearing. The case conferences can, if appropriate, take place by video link or by telephone. Commencement 1. This Practice Note replaces the Practice Note SC Gen 17 issued on 22 February 2011 and commences on 12 August 2014. Application 2. This Practice Note applies to representative proceedings under Part 10 of the Civil Procedure Act. General 3.1 Words and expressions in this Practice Note have the meanings given to them in Part 10 of the Act. 3.2 Subject to Part 10 of the Act, the Uniform Civil Procedure Rules 2005 (NSW) apply to representative proceedings. 3.3 The aim of this Practice Note is to facilitate the just, quick and cheap conduct of representative proceedings by ensuring that the issues in contest are identified at an early date and that representative

proceedings are not unnecessarily delayed by interlocutory disputes. 3.4 The provisions of SC Gen 9, SC Gen 10, SC Gen 11, SC CL 5, SC CL 7, SC Eq 5 and SC Eq 11 will not apply save to the extent the judge managing particular proceedings orders to the contrary. This is to provide maximum flexibility in bringing the proceedings to trial and their prompt disposal at trial. 3.5 Any practitioner who anticipates problems in complying with any aspect of this Practice Note is to raise the matter with the Court as soon as practicable to comply with obligations imposed by the Civil Procedure Act, s 56. Commencement of proceedings 4.1 Representative proceedings are to be commenced in the Division of the Court appropriate to their subject matter in accordance with the Supreme Court Act 1970 (NSW) and the Uniform Civil Procedure Rules. 4.2 In addition to the requirements of Part 6, Division 4 of the Uniform Civil Procedure Rules, an originating process must: [page 599] (a) describe or otherwise identify the group members either by name or characteristic; (b) specify the nature of the claims and the relief sought by the representative party on his or her own behalf and on behalf of the group members; (c) specify the common questions of law or fact which are said to arise in the proceedings; (d) indicate whether the proceedings are commenced in the Common Law Division or the Equity Division; and (e) contain a notation that the proceedings are listed for an initial case conference at 9:00am on the Wednesday after the expiration of 42 days following the filing of the originating

process. Assignment of proceedings 5.1 When the proceedings are commenced they will be assigned to a judge on the panel of the Division in which the proceedings are filed (the presiding judge). 5.2 The proceedings will be made returnable for an initial case conference before the presiding judge at 9:00am on the Wednesday after the expiration of 42 days from the filing of the originating process. Case conferences 6.1 Representative proceedings will be managed by the presiding judge. 6.2 There will be an initial case conference and subsequent case conferences at times determined by the presiding judge in consultation with the parties. The initial case conference 7.1 The parties should be in a position to deal to the extent possible with the following matters at the initial case conference: (a) whether there is any dispute that the proceedings are representative proceedings for the purpose of Pt 10 of the Civil Procedure Act; (b) any issue concerning the description of group members; (c) any issue concerning the identification of the common questions of fact or law in the originating process; (d) any other issues concerning the adequacy of the originating process; (e) a timetable for the service of defences, cross-claims and further pleadings; (f) whether any security for costs will be sought and if so the amount, manner and timing of the provision of such security; and (g) any protocol for communication with unrepresented group

members. 7.2 At or prior to the initial case conference each party will be expected to disclose any agreement by which a litigation funder is to pay or contribute to [page 600] the costs of the proceedings, any security for costs or any adverse costs order. Any funding agreement disclosed may be redacted to conceal information which might reasonably be expected to confer a tactical advantage on the other party. Subsequent case conferences and further interlocutory steps 8.1 It may not be possible to deal with all the matters referred to in par [7] above at the initial case conference. To the extent that it is not possible to do so, those matters will be dealt with at a subsequent case conference or conferences at a time or times fixed by the presiding judge after consultation with the parties. The following additional matters will be dealt with at subsequent case conferences: (a) The date before which a group member may opt out of the proceedings (Civil Procedure Act, s 162). (b) The form and content of the notice to group members advising of the commencement of the proceedings and their right to opt out of the proceedings before a specified date (Civil Procedure Act, s 175) (the opt out notice). (c) The manner of publication and dispatch of the opt out notice. (d) The extent of discovery/disclosure. (e) The steps necessary for the determination of the representative party’s claim and the common questions including: (i) the provision of witness statements; and (ii) the provision of expert evidence and the manner that such evidence will be taken. (f) Such further directions as may be necessary.

(g) The date of the hearing. 8.2 The form, content and manner of service of the opt out notice is required to be approved by the Court (Civil Procedure Act, s 176). The representative party within seven days following the initial case conference or such further time as directed by the presiding judge should file and serve: (a) a draft opt out notice; (b) draft orders with respect to the proposed manner and timing of giving the opt out notice; (c) information as to the anticipated costs of giving the opt out notice in the manner proposed; and (d) a draft order as to the payment of costs of giving the opt out notice if not to be borne by the representative party. [page 601] Interlocutory disputes 9.1 In the event that agreement cannot be reached on the matters referred to in pars [7] and [8] above or any other interlocutory matter at the case conferences, the presiding judge: (a) after hearing from the parties may make such directions as he or she thinks appropriate; or (b) direct that a motion and to the extent necessary a supporting affidavit be filed in respect of the matters in dispute and fix a date for an interlocutory hearing on those matters. Mediation 10.1 As a matter of general practice the proceedings will be referred to mediation at an appropriate time. The timing of that mediation and the identity of the mediator will be a matter for decision by the parties. In the event the parties are unable to agree on a mediator, the mediator will be selected by the presiding judge from persons nominated by the parties. Unless otherwise agreed or ordered the

costs of the mediation will be borne by each party equally. Notice to group members 11.1 Subject to directions of the Court, notice is to be given to group members of the following matters in a form approved by the presiding judge: (a) amendment of the originating process varying the persons who may be group members (Civil Procedure Act, s 163(4)); (b) a motion seeking dismissal for want of prosecution (Civil Procedure Act, s 175(1)(b)); (c) proposed settlement or discontinuance of the proceedings (Civil Procedure Act, s 173); (d) proposed withdrawal of the representative party (Civil Procedure Act, ss 174 and 175(1)(c); (e) the bringing of money into court (Civil Procedure Act, ss 175(3) and 177(4)); and (f) the need for proof of individual claims in respect of a fund (Civil Procedure Act, s 178(5)). Issues remaining for the determination of the common questions 12. In the event there are any matters remaining following determination of the common questions, the presiding judge shall give direction as to the disposal of the remaining issues. [page 602] Third party access to Court files and placing documents on the website 13.1 Access to the Court file by third parties will be under the control of the presiding judge. 13.2 The Supreme Court website lists some details of class actions currently before the Court and provides links to some of the documents that have been filed including the pleadings and opt out notices. The presiding judge will decide which documents will be

available on the website. T F Bathurst AC Chief Justice of New South Wales 31 July 2017

[page 603]

CHAPTER 42 Supreme Court of Queensland Practice Direction Number 2 of 2017 Representative Proceedings Practice Direction Number 2 of 2017 Supreme Court of Queensland Representative Proceedings

1

Introduction

1.1 Representative proceedings under part 13A of the Civil Proceedings Act 2011 (“the Act”) commonly described as class actions present complexities which are unique compared to other forms of civil and commercial litigation. 1.2 This Practice Direction is designed to facilitate the management of representative proceedings. There are a number of features which are designed to assist in their prompt and efficient resolution. 1.3 Once a representative proceeding has been commenced, the Chief Justice in consultation with the Senior Judge Administrator will assign a particular Supreme Court judge to manage the proceeding. 1.4 Subject to any direction from time to time by the Senior Judge Administrator, it is intended that the judge assigned will also determine all interlocutory applications, conduct the trial of any common questions that may arise and give directions for the determination of the remaining questions. 1.5 Representative proceedings will be managed by way of case conferences, which will be a more informal procedure than a directions hearing. This is designed to promote discussion between

the parties and the judge to whom the proceedings are assigned with a view to exploring the best method of bringing the case to a hearing. The case conferences can, if appropriate, take place by video link or by telephone. 2

Commencement

This Practice Direction commences on the commencement of the Limitation of Actions (Child Sexual Abuse) and Other Legislation Amendment Act 2016, part 3 division 1. 3

Application

This Practice Direction applies to representative proceedings under part 13A of the Act. [page 604] 4

General

4.1 Words and expressions in this Practice Direction have the meanings given to them in s 103A of the Act. 4.2 Subject to part 13A of the Act, the Uniform Civil Procedure Rules 1999 apply to representative proceedings. 4.3 The aim of this Practice Direction is to facilitate the just and expeditious resolution of the real issues in representative proceedings at a minimum of expense by ensuring that the issues in contest are identified at an early date and that representative proceedings are not unnecessarily delayed by interlocutory disputes. 4.4 To provide maximum flexibility in bringing representative proceedings to trial and their prompt disposal at trial, the provisions of the following Practice Directions will not apply except to the extent the judge managing a particular proceeding orders to the contrary:

(a) 2012/11 Supervised Case List; (b) 2011/10 Use of technology for the efficient management of documents in litigation; (c) 2002/03 Commercial List. 4.5 Any practitioner who anticipates problems in complying with any aspect of this Practice Direction is to raise the matter with the Court as soon as practicable to comply with obligations imposed by rule 5 of the Uniform Civil Procedure Rules 1999. 5

Commencement of proceedings

5.1 Representative proceedings are to be commenced by claim in the Supreme Court in accordance with the Act and the Uniform Civil Procedure Rules. 5.2 In addition to the requirements of chapter 2, part 3 of the Uniform Civil Procedure Rules, the claim must comply with the requirements of s 103F(1) of the Act, namely: (a) describe or otherwise identify the group members either by name or characteristic; (b) specify the nature of the claims and the relief sought by the representative party on his or her own behalf and on behalf of the group members; (c) specify the common questions of law or fact which are said to arise in the proceedings. 5.3 The claim must also contain a notation that the proceedings will be listed for an initial case conference at a date to be fixed by the judge to whom the proceeding is assigned. [page 605] 6

Assignment of proceedings

6.1 When a proceeding is started, the plaintiff must email a copy of the

originating process together with the known contact details of the parties to the proceeding to the Civil List Manager. 6.2 The proceeding will be made returnable for an initial case conference before the judge to whom it has been assigned (“the presiding judge”). 7

Case conferences

7.1 Representative proceedings will be managed by the presiding judge. 7.2 There will be an initial case conference and subsequent case conferences at times determined by the presiding judge in consultation with the parties. 7.3 The parties are encouraged to file a joint position paper in advance of each case management conference, listing the major points the parties anticipate raising and outlining their respective positions on each issue in one to three sentences. 8

The initial case conference

8.1 The parties should be in a position to deal to the extent possible with the following matters at the initial case conference: (a) whether there is any dispute that the proceedings are representative proceedings for the purpose of part 13A of the Act; (b) any issue concerning the description of group members; (c) any issue concerning the identification of the common questions of fact or law in the originating process; (d) any other issues concerning the adequacy of the originating process; (e) a timetable for the service of defences, cross-claims and further pleadings; (f) disclosure and document management; (g) whether any security for costs will be sought and if so the amount, manner and timing of the provision of such security;

(h) whether the matter should be referred for alternative dispute resolution; and (i) any protocol for communication with unrepresented group members. 8.2 At or prior to the initial case conference each party will be expected to disclose any agreement by which a litigation funder is to pay or contribute to the costs of the proceeding, any security for costs or any adverse costs order. Any funding agreement disclosed may be redacted to conceal information which might reasonably be expected to confer a tactical advantage on the other party. [page 606] 9

Subsequent case conferences and further interlocutory steps

9.1 It may not be possible to deal with all the matters referred to in [8] above at the initial case conference. To the extent that it is not possible to do so, those matters will be dealt with at a subsequent case conference or conferences at a time or times fixed by the presiding judge after consultation with the parties. The following additional matters will be dealt with at subsequent case conferences: (a) The date before which a group member may opt out of the proceeding (s 103G(1) of the Act). (b) The form and content of the notice to group members advising of the commencement of the proceeding and their right to opt out of the proceeding before a specified date (s 103T(1)(a) of the Act) (“the opt out notice”). (c) The manner of publication and dispatch of the opt out notice. (d) The extent of disclosure. (e) The steps necessary for the determination of the representative party’s claim and the common questions including: (i) the provision of witness statements; and (ii) the provision of expert evidence and the manner that such

evidence will be taken. (f) Such further directions as may be necessary. (g) The date of the hearing. 9.2 The form, content and manner of distribution of the opt out notice is required to be approved by the Court (s 103U(1) of the Act). The representative party within seven days following the initial case conference or such further time as directed by the presiding judge should file and serve: (a) a draft opt out notice; (b) draft orders with respect to the proposed manner and timing of giving the opt out notice; (c) information as to the anticipated costs of giving the opt out notice in the manner proposed; and (d) a draft order as to the payment of costs of giving the opt out notice if not to be borne by the representative party. 10 Interlocutory disputes In the event that agreement cannot be reached on the matters referred to in [8] and [9] above or any other interlocutory matter at the case conferences, the presiding judge: (a) after hearing from the parties may make such directions as he or she thinks appropriate; or (b) may direct that an application and to the extent necessary a supporting affidavit be filed in respect of the matters in dispute and fix a date for an interlocutory hearing on those matters. [page 607] 11 Mediation As a matter of general practice the proceedings will be referred to mediation at an appropriate time by referring order pursuant to rule 323 of

the Uniform Civil Procedure Rules. The timing of that mediation and the identity of the mediator will be a matter for decision by the parties. In the event the parties are unable to agree on a mediator, the mediator will be selected by the presiding judge from persons nominated by the parties. Unless otherwise agreed or ordered the costs of the mediation will be borne by each party equally. 12 Notice to group members Subject to directions of the Court, notice is to be given to group members of the following matters in a form approved by the presiding judge: (a) amendment of the originating process varying the persons who may be group members (s 103H(4) of the Act); (b) a motion seeking dismissal for want of prosecution (s 103T(1)(b) of the Act); (c) proposed settlement or discontinuance of the proceedings (s 103R of the Act); (d) proposed withdrawal of the representative party (ss 103S(4) and 103T(1) (c) of the Act); (e) the payment of money into court (ss 103T(3) of the Act); and (f) the need for proof of individual claims in respect of a fund (s 103V(4) of the Act). 13 Issues remaining for the determination of the common questions In the event there are any matters remaining following determination of the common questions, the presiding judge shall give direction as to the disposal of the remaining issues. 14 Third party access to Court files Unless otherwise ordered, third party access to documents on the Court file will be dealt with in accordance with the Uniform Civil Procedure Rules. Catherine Holmes

Chief Justice 27 February 2017

[page 609]

CHAPTER 43 Example opt-out notices • SHAREHOLDER CLASS ACTION • Opt Out Notice FEDERAL COURT OF AUSTRALIA ALLCO FINANCE GROUP CLASS ACTION Blairgowrie Trading Ltd & Ors v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) & Ors NSD 1609 of 2013 1.

Why is this notice important? A class action has been commenced in the Federal Court of Australia by Blairgowrie Trading Ltd and Alan & Chrystine Flitcroft (Applicants) against Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (AFG), the estate of the late David Raymond Coe (deceased) and KPMG (collectively, the Respondents). The action arises out of a claim that the Respondents either contravened the continuous disclosure requirements of the Corporations Act 2001 (Cth), or otherwise made statements that were misleading or deceptive, thereby causing loss to persons who acquired an interest in ordinary shares in AFG during the period 21 August 2007 to 27 February 2008 (Relevant Period). The Applicants are represented by solicitors Maurice Blackburn, and the action is being funded by International Litigation Funding Partners Pte Ltd (ILFP).

The Applicants, AFG and KPMG will be participating in a mediation before 4 November 2016, at which the parties will explore the possibility of a settlement of this Class Action. The Federal Court has ordered that this notice be published for the information of persons who might be members of the class on whose behalf the action is brought and may be affected by the action. You have been identified as a potential class member. You should read this notice carefully. Any questions you have concerning the matters contained in this notice should not be directed to the court. If there is anything in it that you do not understand, you should seek legal advice. [page 610] 2.

What is a class action? A class action is an action that is brought by one or more persons (the Applicants) on their own behalf and on behalf of a group of people (class members) against another person or persons (the Respondents) where the Applicants and the class members have similar claims against the Respondents. Class members in a class action are not individually responsible for the legal costs associated with bringing the class action. In a class action, only the Applicants are responsible for the costs. Class members are bound by any judgment or settlement entered into in the class action unless they have opted out of the action. This means that: (a) if the class action is successful, class members may be eligible for a share of any settlement monies or Court-awarded damages (though it may be necessary for class members to prove their individual losses in order to recover any such share); (b) if the class action is unsuccessful, class members are bound by that

result; and (c) regardless of the outcome of the class action, class members will not be able to pursue their claims against the Respondents in a separate legal action unless they have opted out. 3.

What is Opt Out? The Applicants in a class action do not need to seek the consent of class members to commence a class action on their behalf or to identify a specific class member. However, class members can cease to be class members by opting out of the class action. An explanation of how class members are able to opt out is found below in the section headed “How can you opt out of the class action”.

4.

What is this class action? This class action, the Allco Finance Group Class Action is brought by the Applicants (Blairgowrie Trading Ltd and Alan & Chrystine Flitcroft) on their own behalf and on behalf of all persons who are “class members” as defined in the action. The Applicants allege in the Further Amended Statement of Claim in Federal Court action NSD 1609 of 2013 that: (i) during the Relevant Period AFG contravened the continuous disclosure requirements of the Corporations Act 2001 (Cth) and the ASX Listing Rules in a number of respects and/or made misleading or deceptive statements in several of its announcements to the ASX, pertaining particularly to the amount of the current liabilities of the Allco group of companies as at 30 June 2007, and the terms of, and the occurrence [page 611] of a review event in relation to, its senior debt facilities; (ii) Mr Coe, as the executive chairman of AFG throughout the Relevant Period, was involved in each of AFG’s contraventions; (iii) the audit opinion given by the Allco group’s auditor, KPMG, for the year ended 30 June 2007

was misleading or deceptive; and that, as a result of the above contraventions, the price of ordinary shares in AFG on the ASX was unduly inflated, thereby causing loss to persons who acquired an interest in such shares during the Relevant Period. The respondents to the class action are AFG, the estate of Mr Coe, and KPMG. The Respondents deny the allegations, and are defending the class action. 5.

Are you a class member? You are a class member if you acquired an interest in ordinary shares in AFG during the Relevant Period (i.e. 21 August 2007 to 27 February 2008) and suffered loss or damage by, or which resulted from, the alleged contraventions referred to above. If you are unsure whether or not you are a class member, you should contact Maurice Blackburn by email: [email protected], or telephone: (03) 8102 2007, or seek your own legal advice without delay.

6.

Will you be liable for legal costs? You will not become liable for any legal costs simply by remaining as a class member for the determination of the common questions. However: (a) if the preparation or finalisation of your personal claim requires work to be done in relation to issues that are specific to your claim, you can engage Maurice Blackburn, solicitors for the Applicants, or other lawyers to do that work for you. A copy of the terms on which Maurice Blackburn are acting in the class action may be obtained from them on the number shown above. If, following the settlement or determination of common questions in the class action, it is necessary for you to prove your individual losses, and they are disputed by the Respondents, you may be required to pay their costs of that dispute if you are unsuccessful, or only partly successful; and

(b) if any compensation becomes payable to you as a result of any order, judgment or settlement in the class action, the Court may make an order that some of that compensation be used to help pay a share of the costs which are incurred by the Applicants in running the class action but which are not able to be recovered from the Respondents; and (c) class actions are often settled out of court. If this occurs in the class action, you may be able to claim from the settlement amount without retaining a lawyer. However, you may still need to prove your individual losses in order to claim from any settlement amount. [page 612] 7.

Funding of this Class Action For the purpose of funding this class action, the Applicants and some class members have entered into Funding Agreements with ILFP, the terms of which include: ILFP will pay part of the costs incurred in conducting the class action (with the balance of those costs to be paid only if there is a successful outcome); ILFP will pay any adverse costs orders which are made in the class action against the Applicants; and at the conclusion of the class action (whether by settlement or judgment), ILFP is entitled to receive, as a first priority out of that person’s share of the settlement or judgment amount: (i) reimbursement of that person’s share of the amounts paid by ILFP under the Funding Agreements (which includes legal costs and disbursements); and (ii) a commission, being a percentage of that person’s share of the settlement or judgment amount, which will vary for each class member depending on how many ordinary shares in AFG they held. Specifically, the percentages are:

Number of Shares Held < 1,000,000 > or = 1,000,000

1. 2.

Resolution on or by 30 June 20141 25% 22.5%

Resolution on or by 30 June 20151 30% 27.5%

Resolution after 30 June 20152 35% 32.5%

The percentages set out in these two columns are no longer applicable, given that the relevant dates have now passed. These percentage amounts will increase in the event that ILFP funds an appeal from a final judgment in the class action, specifically, by 5.0% for each appeal so funded.

(If you wish to see the full terms of the Funding Agreements, see the section below headed “Where can you obtain copies of relevant documents”.) The Applicants propose to seek orders from the Court which would have the effect that the above funding arrangements will apply to all class members, even if they have not entered into a Funding Agreement with ILFP (Common Fund Orders). The Applicants have previously applied for similar orders. Those orders were opposed by the Respondents and the Federal Court declined to make the orders at that stage of the action. The Applicants propose to make a further application, either in connection with settlement discussions (if they occur), or if a successful outcome is obtained (either by settlement or judgment). The Respondents may or may not oppose the orders at this stage. [page 613] If the Court makes Common Fund Orders, all class members who have not opted out of the action will in effect be bound by the funding arrangements and will ultimately be bound to contribute, out of any amount which they become entitled to receive by way of settlement or judgment of their claims, an amount payable to ILFP (including legal costs, disbursements and commission) as if they had agreed to the funding arrangements with ILFP.

It is possible that the court may make no order, or other orders, in respect of funding arrangements. An example of an alternative order is an “equalisation order”, which would result in ILFP being paid only the total amount to which it is entitled under the funding arrangements it has actually agreed with class members, but that amount being shared across all class members rather than only those who have entered the funding arrangements. Class members will not be required to pay any amounts to ILFP (or to Maurice Blackburn) unless and until there is a successful outcome in the class action, whereupon any amounts payable will be deducted from the amount to which each class member is otherwise entitled (but under no circumstances will they exceed that amount). No class member will be ‘out-of-pocket’ simply by remaining as a class member. 8.

What will happen if you choose to remain a class member? Unless you opt out, you will be bound by the outcome of the class action. If the class action is successful, you will be entitled to share in the benefit of any order, judgment or settlement in favour of the Applicants and class members. (In some cases you may have to satisfy certain conditions before your entitlement arises). Further, the amounts to which you are entitled may be partly reduced by any amounts the Court orders be payable in respect of legal costs and disbursements (as outlined in Section 6 above) and any amounts the Court orders be payable to ILFP (as outlined in Section 7 above). If the action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other action.

9.

How can you remain a class member? If you wish to remain a class member there is nothing you need to do at the present time. The Applicants will continue to bring the action on your behalf up to the point where the Court determines those questions that are common to the claims of the Applicants and the class members.

However, it is important for the parties to know who the possible group members are in order to consider settlement. In that context, if you do not wish to opt out of this class action, it is important that you contact Maurice Blackburn to provide information relating to your possible claim, if you have not done so previously. Please do this by 21 October 2016. The contact details are set out below. [page 614] The information required is set out in the attached form titled ‘Group Member Registration Form’. You can either complete the form in writing, and either post or email it to Maurice Blackburn, or alternatively, provide that information electronically via Maurice Blackburn’s website (https://www.mauriceblackburn.com.au/current-cla‐ ss-actions/allco-shareholder-class-action/). Failure to provide the details of your claim to Maurice Blackburn by that date will not prevent you from later seeking to make a claim in this class action, but it might affect the size of any settlement amount agreed. 10. How can you opt out of the class action? If you do not wish to remain a class member you must opt out of the class action. If you opt out you will not be bound by or entitled to share in the benefit of any order, judgment or settlement in the class action, but you will be at liberty to bring your own claim against the Respondents, provided that you issue Court action within the time limit applicable to your claim. You should note that, given the timing of the events which are the subject of the class action, it is likely that if you have not already commenced your own action against the Respondents, the time limit for doing so will expire within a few weeks or months of you opting out. If you wish to bring your own claim against the Respondents, you should seek your own legal advice about your claim and the applicable time limit prior to opting out. If you wish to opt out of the class action you must do so by completing

an “Opt Out Notice” in the form shown below (Form 21 of the Court’s approved forms), then returning it to the Registrar of the Federal Court of Australia at the address on the form. IMPORTANT: the Notice must reach the Registrar by no later than 4.00 pm on 21 October 2016, otherwise it will not be effective. You should submit the Opt Out Notice if: (a) you qualify as a class member and you wish to opt out of the class action; or (b) you believe that you have been incorrectly identified as a class member, because you do not meet the criteria set out in the section headed “Are you a class member” above. Each class member should fill out a separate form. If you are opting out on behalf of a company or business please provide your name, the name of the company or business and your position within the company or business (e.g. director or partner). 11. Where can you obtain copies of relevant documents? Copies of relevant documents, including the Further Amended Originating Application, Further Amended Statement of Claim, the Defence of each of [page 615] the Respondents, and the previous judgment of the Federal Court referred to in Section 7 above, may be obtained by: (a) downloading them from https://www.mauriceblackburn.com.au/cu‐ rrent-class-actions/allco-shareholder-class-action/; (b) inspecting them between 9.00 am and 5.00 pm at one of the offices of Maurice Blackburn, contact details for which are available from www.mauriceblackburn.com.au or by calling (03) 8102 2007;

(c) inspecting them on the Federal Court website, www.fedcourt.gov.au or by visiting a District Registry of the Federal Court in Sydney, Canberra, Melbourne, Brisbane, Adelaide, Perth, Hobart or Darwin; the addresses for these registries are available at www.fedcourt.gov.au or by calling the New South Wales District Registry on (02) 9230 8567. Please consider the above matters carefully. If there is anything of which you are unsure, you should contact Maurice Blackburn by email: [email protected], or telephone: (03) 8102 2007, or seek your own legal advice. You should not delay in making your decision.

• MEDICAL DEVICE CLASS ACTION • FEDERAL COURT OF AUSTRALIA NOTICE TO GROUP MEMBERS ASR Hip Implants Class Action Tammy Maree Stanford & Anor v DePuy International Ltd & Anor NSD 213 of 2011 1.

Why is this notice important? A class action has been commenced in the Federal Court of Australia by Tammy Stanford and Jamie Dunsmore (the Applicants) against DePuy International Limited (DePuy) and Johnson & Johnson Medical Pty Ltd (JJM). The action arises out of the alleged loss and harm suffered as a result of allegedly defective hip implants manufactured and distributed by DePuy and JJM.

2.

What is a class action? A class action is a proceeding that is brought by one or more persons (the Applicants) on their own behalf and also on behalf of a group of people (the group members) against one or more other persons (the Respondents) where the Applicants and the group members have

similar claims against the Respondents. Group members in a class action are not individually responsible for the legal costs associated with bringing the class action. In a class action, only the Applicants are responsible for the costs. [page 616] Group members are bound by any judgment or settlement entered into in the class action unless they have opted out of the proceeding. This means that: (a) if the class action is successful, group members may be eligible for a share of any settlement monies or Court-awarded damages; (b) if the class action is unsuccessful, group members are bound by that result; and (c) regardless of the outcome of the class action, group members will not be able to pursue their claims against the Respondents in separate legal proceedings unless they have opted out. 3.

What is Opt Out? The Applicants in a class action do not need to seek the consent of group members to commence a class action on their behalf or to identify a specific group member. However, group members can cease to be group members by opting out of the class action. An explanation of how group members are able to opt out is found below in the section headed “How can you opt out of the class action”.

4.

What is this class action? This class action, the ASR Hip Implants Class Action, is brought by Tammy Stanford and Jamie Dunsmore (who are the Applicants) on their own behalf and on behalf of all persons who are group members as defined in the proceeding. The Applicants’ allegations in the class action relate to DePuy’s ASR

Hip Resurfacing System and ASR XL Acetabular System (the Products). The Products were manufactured by DePuy and distributed in Australia by JJM. The Applicants claim that the Products were defective, not fit for purpose and/or not of merchantable quality, in contravention of provisions of the Trade Practices Act 1974 (Cth) and, in the case of group members who had their primary surgery in South Australia, the Manufacturers Warranties Act 1974 (SA). The Applicants also allege that DePuy and JJM were negligent in their design, manufacture and supply of the Products. The Applicants claim that they and group members suffered loss and harm as a result of the alleged defects of the Products and that they are therefore entitled to damages, including exemplary and/or aggravated damages. DePuy and JJM deny the allegations, are defending the class action and maintain that the Products were carefully designed, manufactured appropriately and that the outcomes for group members were not caused by [page 617] any defect in the Products, but were the consequence of the usual variability in orthopaedic outcomes associated with this type of surgery. The class action has been listed for the hearing of a number of “common issues” on 2 June 2014 in the Federal Court, Sydney. Copies of the Second Further Amended Statement of Claim and other relevant documents (including the Defences to those claims, the orders of the Court regarding this notice and process, and the common issues to be determined at the hearing on 2 June 2014) may be obtained by:

(a) downloading them from http://www.depuyclassaction.com.au; (b) inspecting them, by appointment, between 9.00am and 5.00pm at an office of Maurice Blackburn, contact details for which are available from the website above or by calling 1800 625 669 (toll free); or (c) inspecting them, by appointment, between 9.00am and 5.00pm at an office of Shine Lawyers, details for which are available by calling 13 11 99. 5.

Are you a group member? You have received this notice because you may be a group member in the class action against DePuy and JJM. You are a group member if you are a person who had surgery performed on you in Australia to implant one or both of the Products, namely: (a) DePuy ASR Hip Resurfacing System; and/or (b) DePuy ASR XL Acetabular System. You are not a group member if you have already opted out of the class action, including if you have done so in the course of entering into a legally enforceable agreement with DePuy and JJM, to settle a claim relating to one or both of the aforementioned ASR Products, including by way of the De Puy ASR Compensation Programme (discussed below). If you have not yet entered into such an agreement with DePuy and JJM but subsequently do so, including through the DePuy ASR Compensation Programme, you will cease to be a group member in the class action. If you are unsure whether or not you are a group member, you should contact the Applicants’ lawyers, Maurice Blackburn or Shine Lawyers (whose contact details are set out below), or seek your own legal advice without delay.

The Federal Court of Australia has set a date by which group members may opt out of the class action. The date is 24 April 2014. It is important that you consider carefully the options available to group members as set out in this notice. [page 618] 6.

Your options Your options are: (a) do nothing, and remain a group member; (b) opt out of the class action and make no claim against DePuy and/or JJM; (c) opt out of the class action and (if desired) pursue a claim against DePuy and/or JJM outside of the class action; or (d) opt out of the class action and (if desired) progress a claim through the DePuy ASR Compensation Programme by registering with that Programme prior to the opt out date.

7.

Will you be liable for legal costs? You will not become liable for any legal costs simply by remaining as a group member for the determination of the common issues. However: (a) if the preparation or finalisation of your personal claim requires work to be done in relation to issues that are specific to your claim, you can engage the Applicants’ lawyers or other lawyers to do that work for you; and (b) if any compensation becomes payable to you as a result of any order, judgment or settlement in the class action, the Court may make an order that some of that compensation be used to help pay a share of the costs which are incurred by the Applicants in running the class action but which are not able to be recovered from DePuy and JJM.

8

What will happen if you choose to remain a group member? Unless you opt out, you will be bound by the outcome of the class action. If the class action is successful, you may benefit from the determination of the common issues listed for hearing, be entitled to claim under a Court approved process or be entitled to share in a settlement in favour of the Applicants and group members. It is likely that you will have to satisfy certain conditions before your entitlement arises. If the action is unsuccessful or is not as successful as you might have wished, you will not be able to sue for compensation for injuries caused by your hip implant in any other proceedings.

9.

How can you remain a group member? If you wish to remain a group member there is nothing you need do at the present time. The Applicants will continue to bring the proceeding on your behalf up to the point where the Court determines those questions that are common to the claims of the Applicants and the group members. [page 619] However, if you have not already done so, you are invited to contact the Applicants’ lawyers, Maurice Blackburn or Shine Lawyers (whose contact details are below) and register as a group member so that future notices can be sent to your preferred address.

10. How can you opt out of the class action? If you do not wish to remain a group member you must opt out of the class action. If you opt out you will not be bound by or entitled to share in the benefit of any order, judgment or settlement in the class action, but you will be at liberty to bring your own claim against DePuy and/or JJM provided that you issue Court proceedings within the time limit

applicable to your claim. You should seek legal advice about the applicable time limit for your claim and whether opting out of the class action will mean you will be out of time to bring any claim on your own behalf (see section 12 below). If you opt out of the class action you may be able to seek compensation from DePuy and/or JJM without the need to pursue a claim in the courts (through the Compensation Programme, details of which are set out in section 11 below). If you wish to opt out of the class action you must do so by completing an “Opt out notice” (enclosed), then returning it to the Registrar of the Federal Court of Australia at the address on the form. Each individual group member that wishes to opt out of the class action should fill out a separate “Opt out notice”. IMPORTANT: the notice must reach the Registrar by no later than 4:30pm on 24 April 2014 otherwise it will not be effective. You should submit the Opt out notice if: (a) you qualify as a group member and you wish to opt out of the class action; or (b) you believe that you have been incorrectly identified as a group member, because you do not meet the criteria set out in the section headed “Are you a group member” above. 11. DePuy’s Compensation Programme Group members who opt out of the class action have the option of registering to participate in the DePuy ASR Compensation Programme (the Programme). Although the Programme has existed for some time, the Programme will be closed shortly after the opt out date (24 April 2014), except to those group members who have registered under the Programme by the opt out date AND opted out of the class action proceedings by the opt out date.

You must register under the Programme by the opt out date (24 April 2014), as well as opt out of the class action proceedings by the opt out date, even if [page 620] you have already submitted a claim under the Programme, but your claim has not yet been finally resolved (that is, you have signed the Deed). If you choose to pursue your claim through the Programme, you must opt out of the class action and register for the Programme by 24 April 2014. Once the opt out date expires, if you have not opted out of the class action and have not registered for the Programme by 24 April 2014, you will no longer be able to participate in the Programme. You are eligible to participate in the Programme if you were implanted with the Products in Australia after July 2003 AND have had revision surgery for either of the Products. If you are eligible and decide to participate in the Programme, DePuy will evaluate your claim according to the process set out in the DePuy ASR Compensation Programme Information Guide. Once your claim is evaluated, an offer, if any, may be made to you by DePuy/JJM through Crawford & Company (Australia) Pty Ltd (Crawford). DePuy has appointed Crawford to administer the Programme. The offer may be made to compensate you for pain and suffering, future treatment costs, out of pocket expenses and, if applicable, loss of earnings related to the revision of the Products. The Programme is not subject to supervision by the Federal Court, which means that the Court has not considered (and will not consider) whether any compensation offered under the Programme is fair and

reasonable. There has been an assessment of some aspects of the Programme by senior and experienced lawyers independent of DePuy, Mr Larry King SC and Mr Roger Gyles AO QC. Further information may be found in the DePuy ASR Compensation Programme Information Guides. An indication of the level of compensation you may receive is set out in the DePuy ASR Compensation Programme Information Guide, or can be obtained by contacting Crawford, the Programme administrator (details below). The remedies that are available to the Court under the Trade Practices Act and under the law of negligence are broader than the compensation and reimbursement offered under the Programme. The Court in the class action has also been asked to order exemplary and/or aggravated damages which are not available under the Programme. If you opt out of the class action in order to participate in the Programme and if DePuy makes you an offer, it may be for less or more than the amount you may receive if you choose to remain a group member in the class action. [page 621] If you opt out of the class action in order to participate in the Programme and do not receive an offer from DePuy or are dissatisfied with any offer that you may receive and you decide to reject it, you will need to bring your own, new proceeding against DePuy and/or JJM in Court. If, by the time you choose to bring your own proceedings the statutory time limit in respect of your claim has expired (see section 12 below), you will not be able to maintain your own proceedings against DePuy and/or JJM. If you chose to register for the Programme, JJM/DePuy will treat any limitation period which applies to your claim as not re-commencing,

unless it had already expired, until 6 months after the day on which you first receive an Offer Letter under the Programme. This is to give you time to submit a claim and consider any offer of compensation without prejudicing your rights. Full details of the terms of the Programme can be accessed at: (a) www.asrhipinfo.com.au; or (b) by contacting the Programme administrator: Crawford & Company (Australia) Pty Ltd Phone: Fax: Email: Mail:

1800 684 149 (03) 9670 8382 [email protected] Crawford & Company (Australia) Pty Ltd GPO Box 5065 Melbourne, VIC 3001

12. Limitation period Limitation periods are set by statute. If a person with an entitlement to claim does not commence legal proceedings by the time a limitation period expires, they may be barred from making a claim. The commencement of the ASR Hips class action suspended the limitation period for all group members who have not opted out. Time starts to run again once a person opts out of the class action. If you opt out of the class action and the statutory time limit on your claim expires, or is found to have already expired because you are no longer covered by the class action, you will be barred from bringing proceedings against DePuy and/or JJM in Court (but not from accepting an offer under the Compensation Programme). This will depend on your particular individual circumstances. Therefore, if you wish to bring your own claim against the DePuy and/or JJM in Court, you should seek your own legal advice about your claim and the applicable time limit prior to opting out.

[page 622] Further information Please consider the above matters carefully. If there is anything of which you are unsure, you should contact: (a) Maurice Blackburn at http://www.depuyclassaction.com.au or by calling 1800 625 669 (toll free); or (b) Shine Lawyers at www.shine.com.au/depuy or by calling 13 11 99.

• NOTICE WHICH INCLUDES REGISTRATION • OPT OUT NOTICE FEDERAL COURT OF AUSTRALIA Earglow Pty Ltd v Newcrest Mining Ltd (VID 406 of 2014) What is this Notice? On 21 July 2014, a class action was commenced in the Federal Court of Australia against Newcrest Mining Ltd (Newcrest). This Notice is published pursuant to Orders of the Federal Court dated 29 July 2015. If you are a person who acquired an interest in securities in Newcrest (ASX:NCM) during the period 13 August 2012 to 6 June 2013 (inclusive), you should read this Notice carefully, as this Notice will contain information which may impact on your ability to participate in the class action. If you do not understand this Notice, you should seek legal advice, and not direct any queries to the Federal Court. Summary of this Notice 1.

If you wish to register for compensation:

a. b. 2. 3. 4.

retain Slater and Gordon; or visit the website identified below and enter your transactional information. If you wish to not be involved in the proceeding: complete and submit an opt out form. If you wish to challenge the orders of the Federal Court: write to Slater and Gordon with reasons. If you do nothing: your rights will be determined without your participation.

The Newcrest Class Action A class action is a proceeding brought by one or more persons (Applicant) on their own behalf, and on behalf of a number of others (group members), [page 623] where the Applicant and the group members have common questions of law and fact to be determined against another person or persons (Respondent). The Newcrest class action was commenced by Earglow Pty Ltd (Earglow), who brings this proceeding on its own behalf, and on behalf of all persons who are considered a group member in the proceeding. The definition of group member is set out below. The class action is presently being funded by Comprehensive Legal Funding LLC (CLF). In summary, Earglow alleges that during the period 13 August 2012 to 6 June 2013 (inclusive), Newcrest engaged in misleading and deceptive conduct, and failed to abide by its continuous disclosure obligations and the ASX Listing Rules, by providing production guidance without a

reasonable basis and by failing to inform the market about information which had a material impact on the value of Newcrest securities. Who is a Group Member? According to the Further Amended Statement of Claim filed in this proceeding, you are a group member in the Newcrest class action if all of the following apply to you: 1. 2.

during the period 13 August 2012 to 6 June 2013 (inclusive) you acquired an interest in securities in Newcrest (ASX:NCM); and you suffered loss and damage as a result of the conduct of Newcrest, as described in this Notice and as alleged in the Further Amended Statement of Claim.

If you are not a group member in the Newcrest class action, you may disregard this Notice. If you are a group member within the Further Amended Statement of Claim definition, you should read this Notice carefully as it will affect your rights. You may access copies of the court papers which detail the relevant documents filed in connection with the Newcrest class action, by: 1.

2. 3.

viewing them at the Slater and Gordon website, which is accessible at http://www.slatergordon.com.au/classactions/newcrest; inspecting them between 9.00 am and 5.00 pm at the Melbourne office of Slater and Gordon; or inspecting them at the Federal Court website, which is accessible at http://www.fedcourt.gov.au, or by visiting a District Registry of the Federal Court in Melbourne, Sydney, Canberra, Brisbane, Perth, Adelaide, Hobart or Darwin. [page 624]

What Group Members Must Do Note: Group members who retain Slater and Gordon and enter into a funding arrangement with CLF before 4:00pm AEST on Friday 28 August 2015, or who have already retained Slater and Gordon and entered into a funding arrangement with CLF, will register to participate in the class action through Slater and Gordon and may disregard this notice. If you are a group member in the Newcrest class action, and have not retained Slater & Gordon, you must select one of the following options: Option A – Register your interest in receiving compensation If you wish to make a claim for any loss you may have suffered as a result of Newcrest’s conduct, as described in the Further Amended Statement of Claim, you must complete the “Group Member Registration Form” on the Slater and Gordon website, which is accessible at http://www.slatergordon.com.au/class-actions/newcrest. Registrations must be completed and submitted online before 4:00 pm AEST on 28 August 2015. Registrations received after this time will not be accepted with the result that you will treated as having not responded to this notice (see Option D below). As above, you also will find copies of the court papers which detail the claims made in the Newcrest class action at this website. Option B – Opt out and cease to be a group member If you do not wish to remain a group member in the Newcrest class action, you must opt out of the proceeding by completing the “Opt Out Notice” below. If you opt out of the Newcrest proceeding, you: 1. 2.

will not be affected by any orders made in the Newcrest class action; will not be permitted to participate in the distribution of any

3.

damages award or settlement outcome; and will be able to commence separate proceedings on your own behalf if you so wish.

Opt out forms must be submitted to the Victorian District Registry of the Federal Court of Australia before 4:00pm AEST on Friday 28 August 2015. Opt out notices received after this time will not be accepted, and you will remain as a group member in the Newcrest class action but will not be permitted to participate in any compensation award (see Option D below). [page 625] Option C – Apply to the Federal Court to vary orders regarding opt out and registration protocol If you wish to challenge the orders made by the Federal Court in relation to either Option A or Option B above, you must send a written notice to the Applicant’s solicitors setting out the challenge you will make and the reasons for that challenge. You may then be required to attend the Victorian District of the Federal Court at a later date to have your challenge heard. Any notice challenging the Federal Court orders must be delivered to Slater and Gordon before 4:00pm AEST on Friday 28 August 2015. Any notice challenging the Federal Court orders received after this time will not be accepted. Option D – Not respond to this notice If you do nothing, (i.e. not complete an opt out form, not register your claim on the Slater and Gordon website nor apply to the Federal Court to vary orders), you will remain a group member in the class action and you will be bound by any court judgment or settlement agreement, but if the court judgment or settlement agreement relate to compensation being payable to registered group members you will not be permitted to

participate in that compensation award or otherwise benefit from the judgment. Further, in that event, any cause of action you might otherwise have had against Newcrest in respect of the matters the subject of the class action will no longer be available. In other words, if you do nothing, you will lose your right to make any claim for damages or other relief against Newcrest in relation to the matters the subject of the allegations made against Newcrest in the class action. What Legal Costs are Applicable? You will not become liable for legal costs by registering your claim for compensation as a group member (i.e. Option A). If the class action resolves by way of a judgment in favour of the Applicant or by way of a negotiated settlement arrangement, then: 1.

the finalisation of your personal claim might require work to be done in processing your claim. If such work is required you may need assistance of solicitors. You may enter into a retainer agreement with Slater and Gordon (or other solicitors) to do that work if it becomes necessary and you will be liable for legal costs associated with the determination of issues concerned only with your claim. If you wish to retain Slater and Gordon you should contact them using the addresses below; and [page 626]

2.

if any compensation becomes payable to you, the Applicant may ask the Court to make an order that some of the compensation be used to pay a portion of the legal costs incurred by it in the running of the Newcrest class action.

Questions

If you are unclear about whether you are a group member, or if you have any other questions regarding the Newcrest class action, you should contact Slater and Gordon by writing to “Newcrest Class Action”, 485 La Trobe St, Melbourne VIC 3000, or by sending an email to [email protected]. Alternatively, you can seek legal advice from other solicitors. If you wish to register (Option A), but do not have access to the internet or are otherwise unable to register in accordance with Option A, please call +613 9949 8719 between the hours of 9:00am to 4:00pm AEST by no later than 4:00pm AEST on 24 August 2015. At the time of your call, please ensure you have all available information relevant to your trading transactions in Newcrest securities.

• LITIGATION FUNDED CLASS ACTION • FEDERAL COURT OF AUSTRALIA (PROCEEDINGS NO NSD1322/2012) REMBRANDT 2 NOTEHOLDERS’ CLASS ACTION NOTICE TO GROUP MEMBERS NOTICE OF OPT-OUT RIGHTS This is a notice for the attention of persons who acquired the ‘Constant Proportion Debt Obligation’ known as ‘Surf’ or ‘Rembrandt 2006-2’ and have informed Squire Patton Boggs that they intend to participate in the Class Action. The purpose of this notice is to advise you of your opt-out rights. If you are such a person, you should read this notice carefully as it affects your rights. If there is anything in it that you do not understand you should seek legal advice. A. OVERVIEW OF THE CLASS ACTION

1

On 5 September 2012, a class action was commenced in the Federal Court of Australia against The Royal Bank of Scotland NV (ABN Amro) and McGraw-Hill International (UK) Limited (Standard & Poor’s) [page 627]

2

3

B.

by Muswellbrook Shire Council (Applicant) on its own behalf and on behalf of group members who purchased the financial instruments known as constant proportion debt obligations (CPDOs) given the name ‘Surf’ or ‘Rembrandt 2006-2’ which was rated ‘AAA’ by Standard & Poor’s and suffered loss or damage as a result (Class Action). The Applicant, ABN Amro and Standard & Poor’s will participate in a mediation on Thursday, 21 July 2016 at which the parties will explore the possibility of a settlement of this Class Action (Mediation). You are receiving this notice because you have already notified or informed the Applicant’s solicitors, Squire Patton Boggs, that you wish to participate in the Class Action and have provided information relevant to your claim against ABN Amro and Standard & Poor’s. If you have not taken those steps and have received this notice in error, please contact Squire Patton Boggs immediately (contact details below).

THE MEDIATION 4 5

The Mediation has been ordered by the Court and is scheduled to occur on Thursday, 21 July 2016. Because you have notified Squire Patton Boggs of your intention to participate in the Class Action, you are considered a Registered Group Member. You will remain a Registered Group Member unless you opt-out of this proceeding in accordance with the instructions set out in Section D.

C.

WHAT WILL HAPPEN IF YOU CHOOSE TO REMAIN A GROUP MEMBER? 6

Unless you opt out, you will be bound by: (a) any settlement agreement reached at or shortly after the Mediation that is approved by the Court; and (b) the outcome of this Class Action (if the Mediation does not result in a settlement and the Class Action continues).

7

8

If the Class Action is successful, you will be entitled to share in the benefit of any order, judgment or settlement in favour of the Applicant and group members. (In some cases you may have to satisfy certain conditions before your entitlement arises.) If the Class Action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other proceedings. If a settlement agreement is reached at or shortly after the Mediation, Registered Group Members (including you) will be contacted at the address you have provided to Squire Patton Boggs and informed of the terms of the proposed settlement (subject to Court approval). Only Registered Group Members will be eligible for a share of any settlement monies and will also [page 628]

9

be bound by the terms of settlement negotiated on their behalf by the Applicant at the forthcoming Mediation if approved by the Court. If the Mediation results in a settlement, the Applicant will: (a) seek Court approval of the settlement; and (b) ask the Court to note the undertaking given by IMF Bentham Ltd (which is providing litigation funding for the Applicant as explained in section F, paragraphs 20 to 22, below) that it will

not fund the claims of any Group Members who opt-out of this proceeding who may choose to bring their own claims in separate proceedings. 10

If the Mediation does not result in a settlement, then the Class Action will continue and you will remain eligible to participate in the Class Action (unless and until you opt out in accordance with procedure in Section D).

D. WHAT WILL HAPPEN IF YOU CHOOSE TO OPT-OUT? 11

12

Group Members can opt-out of the Class Action by completing and returning the enclosed ‘Opt-out Notice’ by 1 July 2016 (the Registration Date). If you opt out of the Class Action you will no longer be: (a) a Group Member in the Class Action; (b) entitled to participate in any settlement arising from the Mediation; or (c) entitled to participate in the Class Action.

13

14

15

If you opt out of the Class Action, you will not be bound by the outcome of any settlement agreement reached at the Mediation or by the outcome of the Class Action but you will be at liberty to bring your own claim against all or any of the Respondents, provided that you issue Court proceedings within the time limit applicable to your claim. If you wish to bring your own claim against all or any of the Respondents, you should seek your own legal advice about your claim and the applicable time limit prior to opting out. If you wish to opt out of the Class Action you must do so by completing the enclosed “Opt-Out Notice” and then returning it to the Registrar of the Federal Court of Australia at the address on the form. IMPORTANT: the Notice must reach the Registrar by no later than 1 July 2016, otherwise it will not be effective. If the Mediation does not result in a settlement, then the Class

Action will continue and both Registered Group Members and Non-Registered Group Members will remain eligible to participate in the Class Action (unless they opt out in accordance with the current or any future opt out notice). [page 629] E.

HOW CAN YOU OPT OUT OF THE CLASS ACTION? 16 17

18

F.

If you do not wish to remain a group member you must opt out of the Class Action. If you wish to opt out of the class action you must do so by completing the enclosed “Opt-out Notice”, then returning it to the Registrar of the Federal Court of Australia at the address on the form. IMPORTANT: the Notice must reach the Registrar by no later than 4pm on 1 July 2016, otherwise it will not be effective. Each Group Member should fill out a separate form. If you are opting out on behalf of a company or business please provide your name, the name of the company or business and your position within the company or business (e.g. director or partner).

WILL YOU BE LIABLE FOR LEGAL COSTS? 19

You will not become liable for any legal costs by remaining a Group Member, being a Registered Group Member or opting out.

G. LITIGATION FUNDING ARRANGEMENTS 20

21

The Applicant in this Class Action is presently being funded by IMF Bentham Ltd (IMF). IMF pays the Applicant’s costs of bringing and running the Class Action. If the Class Action is unsuccessful, IMF will pay any order made against the Applicant to pay the Respondents’ costs. The Applicant has agreed to pay a commission to IMF if any compensation is paid to it as a result of any order, judgment or settlement in the Class Action. If you do not enter into a funding

22

agreement, you will remain a Group Member but will not be required to pay any commission to IMF unless the Court orders otherwise. You should note that regardless of the outcome of the Mediation, the Applicant intends to seek court orders requiring all Registered Group Members (including you) who have not entered into a litigation funding agreement with IMF to pay a portion of their distribution to IMF equivalent to the amount they would have paid had they entered into a funding agreement with IMF.

H. HOW TO GET MORE INFORMATION 23

You can obtain further information about the Class Action by: (a) contacting Amanda Banton at Squire Patton Boggs (the Applicant’s solicitors) on (02) 8248 7888 or at [email protected]; (b) requesting that Squire Patton Boggs provide you with a copy of the Originating Application and Statement of Claim for the Class Action (at no cost to you); [page 630] (c) inspecting the Originating Application and Statement of Claim by visiting a District Registry of the Federal Court in Sydney, Canberra, Melbourne, Brisbane, Adelaide, Perth, Hobart or Darwin (the addresses for these registries are available at www.fedcourt.gov.au or by calling the NSW District Registry on (02) 9230 8567).

24

The Federal Court cannot answer questions about the process or provide legal advice.

• NOTICE WHICH INCLUDES CLASS CLOSURE

• Registration and Opt Out Notice FEDERAL COURT OF AUSTRALIA NAB BANK FEES CLASS ACTION Farey & Ors v National Australia Bank Ltd (VID 1459 of 2011) THIS NOTICE IS INTENDED FOR ALL PERSONS WHO HAVE NOT PREVIOUSLY REGISTERED WITH FINANCIAL REDRESS PTY LTD TO PARTICIPATE IN THE NAB BANK FEES CLASS ACTION BUT ARE CLASS MEMBERS AS DEFINED BELOW. PLEASE READ THIS NOTICE CAREFULLY IF YOU WISH TO PARTICIPATE IN THIS CLASS ACTION YOU MUST COMPLY WITH THIS NOTICE. IF YOU DO NOT DO SO YOUR RIGHTS MAY BE LOST. YOU HAVE 3 OPTIONS: 1. 2. 3.

1

DO NOTHING AND LOSE ANY RIGHTS TO ANY REFUND OF FEES IF THIS ACTION SETTLES REGISTER TO RECEIVE ANY REFUND THAT MAY BECOME AVAILABLE IN THIS CLASS ACTION COMPLETE AN ‘OPT OUT’ FORM AND LOSE A RIGHT TO ANY REFUND AVAILABLE IN THIS ACTION BUT KEEP YOUR RIGHT TO TRY AND GET A REFUND YOURSELF

Why is this notice important? A class action has been commenced in the Federal Court of Australia by Steven Harold Francis Farey, Susan Ann Farey and Farey Enterprises Pty Ltd (Applicants) against National Australia Bank Ltd (ACN 004 044 937) (NAB). The action arises out of a claim that NAB has

unlawfully charged to its customers certain fees on personal and business transaction accounts and personal credit card accounts. [page 631] The Applicants are represented by solicitors Maurice Blackburn Lawyers, and the action is being funded by Bentham IMF Ltd (IMF). Class registrations and member services are conducted by Financial Redress Pty Ltd, a subsidiary of IMF. The Federal Court has ordered that this notice be published for the information of persons who might be members of the class on whose behalf the action is brought and may be affected by the action. You are a class member if at any time prior to 16 December 2011 you were a customer of NAB, held and operated banking facilities with NAB, and were charged by NAB one or more of the following fees: Personal Transaction Accounts (a) Reference Fee (b) Dishonour Fee - Outward (c) Periodical Payment Dishonour Fee Business Transaction Accounts (d) (e) (f) (g)

Reference Fee Dishonour Fee - Outward Irregular Account Fee Periodical Payment Dishonour Fee

Personal Credit Card Accounts (h) Late Payment Fee (i) Overlimit Fee If you are a class member, you should read this notice very carefully.

Any questions you have concerning the matters contained in this notice should not be directed to the Court. If there is anything in it that you do not understand, you should seek legal advice. This notice is part of a court-ordered process to assist the parties to attempt to resolve this proceeding by settlement. In order to do that, the parties need to know how many class members would participate in any settlement of the proceeding, and the potential value of their claims. Class members wishing to participate in any potential settlement of the proceeding must register their claims by 4.00 pm on 27 January 2015. If you do not register, you may lose any rights you have to compensation. 2

What is a class action? A class action is an action that is brought by one or more persons (the Applicants) on their own behalf and on behalf of a group of people (class members) against [page 632] another person (the respondent, in this case NAB) where the Applicants and the class members have similar claims against the respondent. Class members in a class action are not individually responsible for the legal costs associated with bringing the class action. In a class action, only the Applicants or their litigation funder are responsible for the costs. Class members are bound by any judgment or settlement entered into in the class action unless they have opted out of the proceeding. This means that:

(a) if the class action is successful, class members may be eligible for a share of any settlement monies or Court-awarded damages; (b) if the class action is unsuccessful, class members are bound by that result; and (c) regardless of the outcome of the class action, class members will not be able to pursue their claims against NAB in a separate legal action unless they have opted out. 3

What is Opt Out? The Applicants in a class action do not need to seek the consent of class members to commence a class action on their behalf or to identify a specific class member. However, class members can cease to be class members by opting out of the class action. An explanation of how class members are able to opt out is found below in the section headed “How can you opt out of the action”.

4

What is this class action? This class action, the NAB Bank Fees Class Action, is brought by the Applicants on their own behalf and on behalf of all persons who are “class members” as defined in the action. The Applicants allege in the Further Amended Statement of Claim in Federal Court action VID 1459 of 2011 that NAB charged its customers certain fees (as listed above in Section 1 of this Notice) on personal and business transaction accounts and personal credit card accounts, which were unlawful because, amongst other reasons, they were not a genuine agreed pre-estimate of the loss suffered by NAB as a result of the events giving rise to the charging of the fees, and because they were unconscionable, unfair or unjust. The respondent to the class action is NAB. NAB denies the allegations and is defending the class action. A similar class action has been commenced by other persons against

Australia and New Zealand Banking Group Ltd (ANZ), in relation to similar fees [page 633] charged by ANZ. In that class action, the judge found that late payment fees charged by ANZ on personal credit card accounts were unlawful, but that other fees charged by ANZ on personal and business transaction accounts and personal credit card accounts were not unlawful. Both the applicants in that case and ANZ have appealed the judge’s decision, and are awaiting judgment on the appeal. 5

Are you a class member? You are a class member if at any time prior to 16 December 2011 you were a customer of NAB, held and operated banking facilities with NAB, and were charged by NAB one or more of the fees listed above in Section 1 of this Notice. If you are unsure whether or not you are a class member, you should contact Financial Redress Pty Ltd on 1300 473 373 or seek your own legal advice without delay.

6

Will you be liable for legal costs? You will incur no liability for legal costs simply by remaining as a class member, or by registering to participate in any settlement. The NAB Bank Fees Class Action is funded by IMF. This means that IMF has agreed to pay all the legal and other costs associated with the action, including any adverse costs orders. Accordingly, if the class action is unsuccessful, class members will have no liability for legal costs. If, however, the class action is successful and you ultimately receive compensation, then you will be liable for the following costs, which will

only be payable by way of a deduction from your compensation amount, and not otherwise: (a) a commission to IMF equal to 25% of your settlement or award (resolution sum); (b) a share of the Applicants’ costs in conducting the proceeding, which will be apportioned between class members in proportion to the amount each class member receives in compensation. Under no circumstances will class members be required to pay more in legal costs and commissions than they receive in compensation. Please note, you will be required to pay any costs you incur on your own behalf, including legal advice you choose to obtain from lawyers other than Maurice Blackburn Lawyers. [page 634] 7

What will happen if you choose to remain a class member? Unless you opt out, you will be bound by the outcome of the class action, and unless you take one of the two steps referred to in the Important Notice below, you will lose any right to receive compensation or pursue separate action on the same claims. If the class action is successful, you may be entitled to share in the benefit of any order, judgment or settlement in favour of the Applicants and class members. (In some cases you may have to satisfy certain conditions before your entitlement arises, such as providing sufficient information to enable the accounts on which you were charged relevant fees to be identified, and therefore the amount (if any) of your compensation entitlement to be determined.) If the action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other action.

8

How can you remain a class member?

If you wish to remain a class member, and to participate in any future settlement of the NAB Bank Fees Class Action (subject to an assessment that you have a valid claim), then you need to register by no later than 4.00 pm on 27 January 2015, in order for you to receive a distribution from any amount agreed in settlement of the action. You can register: on the website of Financial Redress Pty Ltd (www.financialredress.com.au); or by completing the attached “Registration Form – NAB Bank Fees Class Action” and mailing it to Financial Redress Pty Ltd at the address shown on the form. 9

How can you opt out of the class action? If you do not wish to remain a class member you must opt out of the class action. If you opt out you will not be bound by or entitled to share in the benefit of any order, judgment or settlement in the class action, but you will be at liberty to bring your own claim against NAB, provided that you issue Court action within the time limit applicable to your claim. If you wish to bring your own claim against NAB, you should seek your own legal advice about your claim and the applicable time limit prior to opting out. If you wish to opt out of the class action you must do so by completing an “Opt Out Notice” in the form attached, then returning it to the Registrar of the Federal Court of Australia at the address on the form. IMPORTANT: the Notice must reach the Registrar by no later than 4.00 pm on 27 January 2015, otherwise it will not be effective. You should submit the Opt Out Notice if you qualify as a class member and you wish to opt out of the class action. [page 635]

Each class member should fill out a separate form. If you are opting out on behalf of a company or business please provide your name, the name of the company or business and your position within the company or business (e.g. director or partner). IMPORTANT NOTICE: If you are a class member who has not already registered to participate in the NAB Bank Fees Class Action on the website of Financial Redress Pty Ltd (www.financialredress.com.au), and you do not either: (a) register to participate in the NAB Bank Fees Class Action on the website of Financial Redress Pty Ltd (www.financialredress.com.au) or by completing the attached “Registration Form – NAB Bank Fees Class Action” and mailing it to Financial Redress Pty Ltd at the address shown on the form; or (b) complete and return to the Registrar of the Federal Court of Australia an “Opt Out Notice” form, by 4.00 pm on 27 January 2015, you will remain a class member for all purposes, and will be bound by any resolution in the NAB Bank Fees Class Action, but, subject to further order of the Court, will not be entitled to participate in the distribution of any future amount agreed in settlement of the NAB Bank Fees Class Action. 10 Where can you obtain copies of relevant documents? Copies of relevant documents, including the Further Amended Originating Application, the Further Amended Statement of Claim and the orders of the Court regarding this Notice may be obtained by downloading them from www.mauriceblackburn.com.au or www.financialredress.com.au. Please consider the above matters carefully. If there is anything of which you are unsure, you should contact Financial Redress Pty Ltd on 1300 473 373 or email [email protected] or seek your own legal advice. You should not delay in making your decision.

Registration Form – NAB Bank Fees Class Action IMPORTANT NOTICE: If you wish to register to participate in the NAB Bank Fees Class Action, and have not previously registered to participate, you can register electronically on the website of Financial Redress Pty Ltd (www.financialredress.com.au) or by completing and mailing this form. If you wish to register by completing and mailing this form, please ensure that the details referred to below are completed, and that the completed form is mailed to Financial Redress Pty Ltd, PO Box Z5106, Perth WA [page 636] 6001 in sufficient time for it to be delivered to that address by 4.00 pm on 27 January 2015. If your completed form is not received by that time, you may not be eligible to participate in any future settlement of the NAB Bank Fees Class Action. If you have more than one ‘NAB ID’ number, you will need to lodge a separate form for each ‘NAB ID’ number. For example, if you have a personal transaction account and a personal credit card account under the same ‘NAB ID’ number, you need only lodge one form. If, however, you have those accounts plus a business transaction account under a separate ‘NAB ID’ number, you will need to lodge separate forms for each separate ‘NAB ID’ number. 1.

Name of Person Lodging Form (Mr / Mrs / Ms, etc)

2.

Full Name

Contact Information Mailing Address (include state and postcode):

Telephone No: Email Address:

YOU MUST PROVIDE YOUR NAB ID OR ACCOUNT NUMBERS TO REGISTER 1.

NAB Identification Number (This is known as your “NAB ID” and is the account-holder’s 8 to 10-digit identification no. assigned by NAB. The number is recorded on the back of your NAB transaction account card or credit card in the top left hand corner. If you are unable to provide your “NAB ID”, please provide your account number(s) on the reverse of this form.)

2.

Name of Account-Holder(s) (This is the name of the person(s) or entity(ies) in which the account was held, and whose name(s) appeared on the account statements. If it is the same as the ‘Name of Person Lodging Form’ specified above, write ‘As Above’.)

[page 637] 3.

Type(s) of Account Held With NAB (please tick) Personal Transaction Account(s) Personal Credit Card Account(s) Business Transaction Account(s)

4.

Account Numbers (Complete this section only if you have not provided your NAB Identification Number at Item 3 on the reverse side of this page.)

Account Number

Account Type

(please include BSB number)

(Personal Transaction Account / Personal Credit Card Account / Business Transaction Account)

• OVERLAPPING GROUP MEMBERS • FEDERAL COURT OF AUSTRALIA (PROCEEDINGS NOS.: NSD 1344/2016; NSD 414/2016; and NSD 417/2016) STANDARD & POOR’S CLASS ACTIONS NOTICE TO GROUP MEMBERS NOTICE OF RIGHTS TO: (1) REGISTER TO PARTICIPATE IN A MEDIATION TO BE HELD ON 6 & 7 DECEMBER 2016; or (2) OPT OUT OF THE PROCEEDINGS. This is a notice that the Federal Court of Australia has ordered be given to persons who acquired the “Synthetic Collateralised Debt Obligations” known as “Green AA” or “Blue Gum AA-” or “Esperance AA+” or “Scarborough AA” or “Torquay AA” or “Parkes AAA” or “Parkes AA-” or “Endeavour AAA” or “Federation AAA” or “Federation A+” or “Glenelg AA-” [page 638]

and who were NOT group members in the Federal Court Proceeding No. NSD 656/2013, City of Swan & Anor v McGraw-Hill Financial, Inc & Ors. As explained below, if you are a Group Member in one or more of the class actions identified in this notice (Related Class Actions), you have 3 options: (1) Register to have your claims considered at the Mediation by 11 November 2016 or (2) Opt-out of one or more of the Related Class Actions by 11 November 2016 or (3) Do nothing in which case: (a) If a Related Class Action settles at or shortly after the Mediation, you will lose your rights as a Group Member unless the Court orders otherwise; or (b) If a Related Class Action does not settle at or shortly after the Mediation, you will still be a Group Member with the same rights as other Group Members.

If you are such a person, you should read this notice carefully as it affects your rights. If there is anything in it that you do not understand you should seek legal advice. A. OVERVIEW OF THE RELATED CLASS ACTIONS Mitsub Class Action (Proceeding No. NSD 1344/2015) 1

On 2 November 2015, a class action was commenced in the Federal

Court of Australia (Federal Court or Court) by Mitsub Pty Limited as Trustee for the Chris Carroll Superannuation Fund (Mitsub) against McGraw-Hill Financial, Inc (now known as S&P Global, Inc) and Standard & Poor’s International, LLC (now known as S&P International, Inc) (together referred to as “Standard & Poor’s”) on its own behalf and on behalf of Group Members who purchased the synthetic collateralised debt obligation (SCDO) known as Blue Gum AA- (listed in the table below) which is alleged to have been rated by Standard & Poor’s, and suffered loss or damage as a result (Mitsub Class Action). [page 639] SCDO Blue Gum

S&P Rating at Issue AA-

Issuer

Series No

ISIN

STARTS (Cayman) Ltd

2005-5

AU300STRC012

MDA Class Action (Proceeding No. NSD 414/2016) 2

On 23 March 2016, another class action was commenced in the Federal Court against Standard and Poor’s by MDA National Insurance Pty Limited (MDA) on its own behalf and on behalf of Group Members who purchased the SCDOs listed in the table below which are alleged to have been rated by Standard & Poor’s, and suffered loss or damage as a result (MDA Class Action).

SCDO Glenelg

S&P Rating at Issue AA-

Blue Gum

AA-

Scarborough Torquay

AA AA

Parkes

AA-

Issuer

Series No

ISIN

Aphex Pacific Capital Ltd STARTS (Cayman) Ltd Helium Capital Ltd Corsair (Cayman Islands) No. 4 Ltd Managed ACES SPC

2006-5

AU300AFEX047

2005-5

AU300STRC012

64 2006-5

AU300HCAP027 AU300CSRJ039

2006:7 Class IIA

AU300MSMA020

Lifeplan Class Action (Proceeding No. NSD 417/2016) 3

On 23 March 2016, a further class action was commenced in the Federal Court against Standard & Poor’s by Lifeplan Australia Friendly Society Limited and Big Sky Building Society Limited1 (collectively, the Lifeplan Applicants) on their own behalf and on behalf of Group Members who purchased the SCDOs listed in the table below which are alleged to have been rated by Standard & Poor’s, and suffered loss or damage as a result (Lifeplan Class Action). [page 640]

SCDO Green Blue Gum

S&P Rating at Issue AA AA-

Esperance Scarborough Torquay

AA+ AA AA

Parkes Parkes Endeavour Federation

AAA AAAAA AAA

Federation

A+

Issuer

Series No

ISIN

Ethical CDO I Ltd STARTS (Cayman) Ltd Helium Capital Ltd Helium Capital Ltd Corsair (Cayman Islands) No. 4 Ltd Managed ACES SPC Managed ACES SPC Saphir Finance Plc Securitized Prod. of Restructured Collateral Ltd SPC, f/a/o the Series 2007-1 Federation A-1 Segregated Portfolio Securitized Prod. of Restructured Collateral Ltd SPC, f/a/o the Series 2007-1 Federation A-1 Segregated Portfolio

2 2005-5

AU300ETHI010 AU300STRC012

60 64 2006-5

AU300HCAP019 AU300HCAP027 AU300CSRJ039

2006:7 Class IA 2006:7 Class IIA 2004-4 2007-1

AU300MSMA012 AU300MSMA020 XS0195709801 AU3fn2622

2007-1

AU300LBTC011

[page 641]

4

5

6

7

8

9

Claims in respect of Green AA, Esperance AA+, Parkes AAA, Endeavour AAA, Federation AAA or Federation A+ are only brought in the Lifeplan Class Action and are hereinafter referred to as the “Lifeplan Non-Overlapping SCDOs”. The applicants and certain Group Members in the Mitsub Class Action and the MDA Class Action are represented by Squire Patton Boggs lawyers (SPB) and have entered into a Funding Agreement with Litigation Capital Partners LLP Pte Ltd (LCP) (Funded Group Members). As explained in Section E below, LCP will seek a funding commission from the proceeds of any claims by the applicants and Funded Group Members in the Mitsub Class Action and the MDA Class Action for taking the risk of funding them. If the matter settles at or shortly after Mediation, LCP will only seek a funding commission from the applicants in the Mitsub Class Action and the MDA Class Action and Funded Group Members. The applicants in the Lifeplan Class Action are represented by Johnson Winter & Slattery (JWS) and have not entered into a funding agreement. The Mitsub Class Action, MDA Class Action and Lifeplan Class Action are collectively referred to in this notice as the “Related Class Actions”. The SCDOs listed in the tables in paragraphs 1 to 3 above are collectively referred to in this notice as the “Claim SCDOs”. A number of the Claim SCDOs were also the subject of Federal Court Proceeding No. NSD 656/2013 City of Swan & Anor v McGraw-Hill Financial, Inc & Ors (City of Swan Proceedings). Those proceedings have been resolved and are not the subject of this notice. If you were a group member in the City of Swan Proceedings you are not entitled to make a further claim in any of the Related Class Actions. The parties in the Related Class Actions will participate in a mediation ordered by the Court to be held by no later than 9 December 2016 at which they will explore the possibility of a settlement of one or more of those Actions (Mediation). The Court has ordered that this notice be sent to you because you have been identified as someone who may be a Group Member in one or

more of the Related Class Actions and, as a result: (a) you may be entitled to have your claims considered at the Mediation; and (b) your rights may be affected by any settlement that is reached as a result of the Mediation. 10 11 12

If you purchased one or more of the Claim SCDOs and suffered loss or damage as a result, you should read this notice carefully. The information in Section B of this notice will help you determine whether you are a Group Member. This Notice has been sent to you by Carolyn Mitchell who is an independent third party retained to issue this Notice. Carolyn Mitchell is not otherwise involved in any of the Related Class Actions. Any questions you have [page 642]

13

concerning the matters contained in this notice should not be directed to Carolyn Mitchell or to the Court. If there is anything in it that you do not understand, you should seek legal advice (from a person other than Carolyn Mitchell). If you are a Group member, you have three options: Option 1 – Register to have your claims considered at the Mediation; or Option 2 – Opt-out of any of the Related Class Actions; or Option 3 – Do nothing. Each of these options is explained in Section F of this notice.

B. ARE YOU A GROUP MEMBER? 14

In broad terms, the statements of claim in the Related Class Actions allege that the Applicants and Group Members suffered financial loss as a result of acquiring interests in one or more of the Claim SCDOs in

reliance upon the credit rating allegedly assigned to each SCDO by Standard & Poor’s because the ratings were not accurate, or appropriate, by reason of deficiencies in Standard & Poor’s rating methodology, and Standard & Poor’s lack of independence. You may be a Group Member in more than one of the Related Class Actions as explained further below. Mitsub Group Member 15

You are currently a Group Member of the Mitsub Class Action if: (a) during the period between 2005 and 2008, you acquired an interest in the Blue Gum AA- SCDO; and (b) you acquired that interest in reliance upon the credit rating assigned by or on behalf of Standard & Poor’s and have suffered loss or damage as a result; and (c) you are not an applicant or group member in the City of Swan Proceedings.

16

The persons who satisfy all of the above criteria are called “Mitsub Group Members”.

MDA Group Member 17

You are currently a Group Member of the MDA Class Action if: (a) during the period between 2005 and 2008, you acquired an interest one or more of the following SCDOs – Blue Gum AA-, Torquay AA, Scarborough AA, Parkes AA- and Glenelg AA-; and (b) you acquired that interest in reliance upon the credit rating assigned by or on behalf of Standard & Poor’s and have suffered loss or damage as a result; and (c) you are not an applicant or group member in the City of Swan Proceedings. [page 643]

18

The persons who satisfy all of the above criteria are called “MDA Group Members”.

Lifeplan Group Member 19

You are currently a Group Member of the Lifeplan Class Action if: (a) during the period between 2005 and 2008, you acquired an interest in one or more of the following SCDOs – Green AA, Blue Gum AA-, Esperance AA+, Scarborough AA, Torquay AA, Parkes AAA, Parkes AA-, Endeavour AAA, Federation AAA and/or Federation A+ SCDOs; and (b) you acquired that interest in reliance upon the credit rating assigned by or on behalf of Standard & Poor’s and have suffered loss or damage as a result; and (c) you are not an applicant or group member in the City of Swan Proceedings.

20

The persons who satisfy all of the above criteria are called “Lifeplan Group Members”.

You may be a Group Member of more than one Related Class Action (Overlapping Group Member) 21

22

23

If you meet the definition of Group Member in relation to an interest acquired in the Blue Gum AA- SCDO, you will be an Overlapping Group Member in the Mitsub Class Action, the MDA Class Action and the Lifeplan Class Action. If you meet the definition of Group Member in relation to an interest acquired in any one or more of the Torquay AA, Scarborough AA and Parkes AA- SCDOs, you will be an Overlapping Group Member in the MDA Class Action and the Lifeplan Class Action. Important: If you are an Overlapping Group Member who wishes to participate in the Mediation you will need to register in respect of any Overlapping SCDOs. You may only register in one of the Related Class Actions in relation to the Overlapping SCDOs. Overlapping SCDOs are Blue Gum AA-, Torquay AA, Scarborough AA and Parkes AA-. In

addition, if you also have other claims in respect of Non-Overlapping SCDOs, you will need to register your claims in respect of those SCDOs as follows: (a) If you have a claim in respect of Green AA, Esperance AA+, Parkes AAA, Endeavour AAA, Federation AAA or Federation A+ (the Lifeplan Non-Overlapping SCDOs), you may only register in the Lifeplan Class Action in respect of those claims. (b) If you have a claim in respect of Glenelg AA- (the MDA NonOverlapping SCDO), you may only register in the MDA Class Action in respect of that claim. [page 644] (c) If you have claims in relation to both the Lifeplan NonOverlapping SCDOs and the MDA Non-Overlapping SCDO, you will need to register in BOTH the Lifeplan Class Action and the MDA Class Action in respect of those products. 24

If you register in one or more of the Related Class Actions, for the purposes of the Mediation and any in-principle settlement reached at the Mediation (or within 28 days after that Mediation is terminated by the mediator) of the Related Class Actions in which you do not register in respect of your claims in relation to the Overlapping SCDOs, you will be deemed to have opted-out of the Related Class Actions in which you do not register in respect of your claims in relation to the Overlapping SCDOs. This means that if the Related Class Action in which you register in respect of any Overlapping SCDOs does not settle at or within 28 days of the Mediation, but another Related Class Action in respect of any of those Overlapping SCDOs does settle at or within 28 days of the Mediation, you shall not be permitted, without leave of the Court, to seek any benefit in respect of the Overlapping SCDOs from the other Related Class Action that does settle (with such settlement being approved by the Court). The amount of the losses that

you claim for any Overlapping SCDOs will not be affected by the Related Class Action in which you elect to register in respect of the Overlapping SCDOs (if any). Further information as to how to exercise this choice is set out in Section F. If you do nothing, you will not be entitled to participate in any settlement reached at or shortly after the Mediation. C. THE MEDIATION 25 26

27

The Mediation has been ordered by the Court and is scheduled to occur on 6 and 7 December 2016. Your claims as a Group Member of the Related Class Actions will only be considered at the Mediation if you register in accordance with the registration requirements below (that is, you become a Registered Group Member). Any settlement reached as a result of the Mediation must be approved by the Court as being in the interests of Group Members before it becomes effective.

D. WILL YOU BE LIABLE FOR LEGAL COSTS? 28

You will not become liable for any legal costs by registering to participate in the Mediation and remaining a Registered Group Member. However: (a) if the preparation or finalisation of your personal claim requires work to be done in relation to issues that are specific to your claim, you can engage JWS, SPB or other lawyers to do that work for you. Details of the terms on which JWS are acting in the Lifeplan Class Action and SPB are acting in the Mitsub Class Action and MDA Class Action may be obtained by contacting JWS or SPB respectively (refer to Section G of this notice for contact details); [page 645] (b) if any compensation becomes payable to you as a result of any

order, judgment or settlement in any of the Related Class Actions, the Court may make an order that some of that compensation be used to help pay a share of the costs (including legal costs) which are incurred by Mitsub, MDA or the Lifeplan Applicants in the running of the particular Related Class Action but which are not able to be recovered from the respondents, Standard & Poor’s; (c) if you are registered in the Mitsub or MDA Class Actions you may be able to enter into a litigation funding agreement to meet the costs of having relevant documentation for the Mediation prepared. Further information about this may be obtained from SPB; and (d) class actions are often settled out of Court. If this occurs in any of the Related Class Actions, you may be able to claim from the settlement amount without retaining a lawyer. E. LITIGATION FUNDING ARRANGEMENTS Lifeplan Class Action – self-funded 29

The Lifeplan Applicants are presently funding the Lifeplan Class Action themselves and do not intend to enter into any litigation funding agreement with a third party funder before the Mediation. However, if the Mediation is unsuccessful the Lifeplan Applicants intend to proceed to trial and may consider litigation funding options in respect of their legal costs of the Lifeplan Class Action.

Mitsub Class Action and MDA Class Action – litigation funding 30

31

LCP is funding the Applicants in the Mitsub Class Action and the MDA Class Action (Mitsub and MDA Applicants) and the Funded Group Members. LCP is obliged to pay the Mitsub and MDA Applicants’ costs of bringing and running the Mitsub Class Action and the MDA Class Action. The Mitsub and MDA Applicants and Funded Group Members have agreed to pay a commission to LCP if they receive any compensation as a result of any order, judgment or settlement in those proceedings. If you are not a Funded Group Member and you register as a Group

Member in either of the Mitsub or MDA Class Actions: (a) you will remain a Group Member in the Mitsub or MDA Class Actions even if you do not enter into a litigation funding agreement with LCP and will not be required to pay any commission to LCP as a Group Member if the matter settles at or shortly after Mediation; (b) if the Mitsub and MDA Class Actions settle at or shortly after the Mediation: (i) the amount of compensation payable to you will not be reduced or otherwise affected by any sum in the nature of a commission or fee to LCP; [page 646] (ii) the Mitsub and MDA Applicants and LCP will not seek Court orders requiring all Group Members in the Mitsub and MDA Class Actions who have not entered into a litigation funding agreement with LCP to pay a portion of any compensation received by them to LCP equivalent to the amount they would have paid if they had entered into a litigation funding agreement with LCP nor any other amount in the nature of a commission or fee to LCP. F. WHAT ARE YOUR OPTIONS? 32

33

If you do not consider that you are a Group Member in any of the Related Class Actions, you do not need to do anything. If you are unsure whether you are a Group Member in one or more of the Related Class Actions, you should seek legal advice before 11 November 2016. If you consider that you are a Group Member in one or more of the Related Class Actions, you must choose one of following three options:

OPTION Register to have your claims considered at the Mediation

DEADLINE 11 November 2016

MORE INFORMATION Paragraphs 34 to 42 below

Opt out of one or more of the Related Class Actions Do nothing

11 November 2016

Paragraphs 43 to 46 below

N/A

Paragraphs 47 and 48 below

Option 1 – Register to have your claims considered at the Mediation 34

35

Only a Group Member of any of the Related Class Actions who registers in accordance with the registration requirements below (Registered Group Member) will have their claims considered at the Mediation. If you wish to become a Registered Group Member you must: (a) complete the attached “Group Member Registration Form” and submit it to JWS or SPB in accordance with the instructions on the form by 4:00pm on 11 November 2016; and (b) provide information to substantiate your claim as identified on the Group Member Registration Form. The information provided must be complete, accurate and legible for your registration to be effective. If you have already provided that information to JWS or SPB you do not need to provide it again.

36

If you are a Group Member in more than one Related Class Action: [page 647] (a) you can only register in one of those class actions in respect of the Overlapping SCDOs; (b) you will need to register in both the Lifeplan Class Action and MDA Class Action if you have claims in respect of the Lifeplan Non-Overlapping SCDOs and Glenelg AA-. The amount of the losses that you claim for any Overlapping SCDOs will not be affected by the Related Class Action in which you elect to register in respect of the Overlapping SCDOs (if any). If you register in one Related Class Action, for the purposes of the Mediation and any inprinciple settlement reached at the Mediation (or within 28 days after

that Mediation is terminated by the mediator), you will be deemed to have opted-out of the Related Class Actions in which you do not register in respect of your claims in relation to the Overlapping SCDOs. This means that if the Related Class Action in which you register in respect of any Overlapping SCDOs does not settle at or within 28 days of the Mediation, but another Related Class Action in respect of any of those Overlapping SCDOs does settle at or within 28 days of the Mediation, you shall not be permitted, without leave of the Court, to seek any benefit in respect of the Overlapping SCDOs from the other Related Class Action that does settle (with such settlement being approved by the Court). 37

38

39

40

41

If you do not register to become a Registered Group Member by 4:00pm on 11 November 2016, or you fail to provide JWS or SPB with the information to substantiate your claim (if necessary) by the time specified, you will not have your claims considered at the Mediation. The information you provide in and together with the Group Member Registration Form will be used by JWS and/or SPB and all or some of it may be provided to Standard & Poor’s prior to or at the Mediation to enable Standard & Poor’s to have sufficient information about all of the claims against them to consider settlement of the Related Class Actions. If a settlement is reached at or shortly after the Mediation, Registered Group Members will be contacted at the address provided on the Group Member Registration Form and informed of the terms of the settlement (which will be subject to Court approval). Any person who does not opt out of a Related Class Action of which they are a Group Member (both Registered Group Members and Group Members who do nothing in response to this notice (see Option 3 at paragraphs 47 and 48 below)) will be bound by the terms of any settlement of that Related Class Action as a result of the Mediation, but only Registered Group Members in that Class Action will be eligible for a share of any settlement monies. If the Mediation does not result in a settlement of a Related Class

Action, then that Class Action will continue and Registered Group Members will remain eligible to participate in that Class Action unless and until they opt out in accordance with any future opt out notice. [page 648] 42

If you are a Funded Group Member in the Mitsub or MDA Class Action and you are contemplating registering in the Lifeplan Class Action in respect of a Non-Overlapping SCDO, before doing so you should read carefully your Funding Agreement or seek legal advice from SPB or another lawyer. That is because your Funding Agreement contains complex terms and conditions that may result in you incurring a liability to LCP for any moneys you receive in respect of particular NonOverlapping SCDOs or a settlement payment in the Lifeplan Class Action.

Option 2 – Opt-out of a Related Class Action 43

44

45

You can opt out of one or more of the Related Class Actions by completing the attached “Opt-out Notice” for each of the Related Class Actions that you wish to opt out of. Opt-out Notices must be sent to the Registrar of the Federal Court at the address on the Notice by 4:00pm on 11 November 2016. IMPORTANT: the Notice must reach the Registrar by no later than 4:00pm on 11 November 2016, otherwise it will not be effective. The Group Members who opt out of a Related Class Action prior to 4:00pm on 11 November 2016 will no longer be Group Members of that Class Action (for all time, not just for the purposes of the Mediation). If you opt out of a Related Class Action: (a) you will permanently cease to be a Group Member in that Class Action; (b) you will not participate in the Mediation of that Class Action; (c) you will not be bound by any settlement resulting from the

Mediation; and (d) if the Class Action does not settle at or shortly after the Mediation, you will not be bound by or receive any benefit from the outcome of that Class Action. 46

If you opt-out of all Related Class Actions in relation to a Claim SCDO, you will be at liberty to bring your own claim against Standard & Poor’s, provided that you file Court proceedings within the time limit applicable to your claim. If you wish to bring your own claim against Standard & Poor’s, you should seek your own legal advice about your claim and the applicable time limit prior to opting out.

Option 3 – Do nothing 47

If you do nothing by 4:00pm on 11 November 2016 and: (a) a settlement agreement is reached at or shortly after the Mediation you will not be notified of the settlement agreement. Unless the Court grants you leave, you will not be entitled to receive any compensation from the settlement. You will also be prevented from making a claim in respect of or relating to the subject matter of the Related Class Action against Standard & Poor’s by separate proceedings and in the Related Class Actions, unless you are an Overlapping Group Member in which case [page 649] you will remain a Group Member in any Related Class Action that does not settle at or shortly after the Mediation, and will have the rights of other Group Members going forward; or (b) the Mediation does not result in a settlement, you will remain a Group Member and have the rights of other Group Members going forward.

48

This is the only opportunity for Group Members to have their claims

considered at the Mediation (and, unless the Court grants you leave, to participate in any settlement that may be reached at or shortly after the Mediation). That can only occur if you become a Registered Group Member by providing JWS and/or SPB with a completed and signed Group Member Registration Form and supporting documentation (see Option 1 at paragraphs 34 to 42 above). G. HOW TO GET MORE INFORMATION 49

You can obtain further information about the Mitsub Class Action or MDA Class Action by: (a) contacting Ms. Amanda Banton at Squire Patton Boggs (Mitsub and MDA Applicants’ solicitors) on (02) 8248 7850 or at [email protected] (copy [email protected]); (b) requesting that Squire Patton Boggs provide you with a copy of the originating application and statement of claim for the Mitsub Class Action and/or MDA Class Action (at no cost to you); (c) inspecting the originating application and statement of claim by visiting a District Registry of the Federal Court in Sydney, Canberra, Melbourne, Brisbane, Adelaide, Perth, Hobart or Darwin (the addresses for these registries are available at www.fedcourt.gov.au or by calling the NSW District Registry on (02) 9230 8567).

50

You can obtain further information about the Lifeplan Class Action by: (a) contacting Ms. Toni Vozzo at Johnson Winter & Slattery (Lifeplan’s Applicants solicitors) on (08) 8239 7184 or at [email protected]; (b) requesting that Johnson Winter & Slattery provide you with a copy of the originating application and statement of claim for the Lifeplan Class Action (at no cost to you); (c) inspecting the originating application and statement of claim by

visiting a District Registry of the Federal Court in Sydney, Canberra, Melbourne, Brisbane, Adelaide, Perth, Hobart or Darwin (the addresses for these registries are available at www.fedcourt.gov.au or by calling the NSW District Registry on (02) 9230 8567). 51

This Notice has been sent to you by Carolyn Mitchell who is an independent third party retained to issue this Notice. Carolyn Mitchell is not otherwise involved in any of the Related Class Actions.

[page 651]

CHAPTER 44 Example settlement notices • FAIRBRIDGE FARM (NSW) • IMPORTANT NOTICE “FAIRBRIDGE FARM SCHOOL” CLASS ACTION NOTICE OF PROPOSED SETTLEMENT Any person who was a student at the Fairbridge Farm School at Molong in New South Wales at any time during the period from 1937 to 1974 should take notice of the matters set out below. This notice relates to a class action that has been commenced in the Supreme Court of New South Wales. The Supreme Court has ordered that this notice be published to inform people about a proposed settlement of the class action. If you are a former student of Fairbridge Farm School you should read this notice carefully, as the matters set out below may affect your legal rights. Any questions you have concerning the matters contained in this notice should not be directed to the Court.

What is the Fairbridge Farm School class action? The class action was commenced in 2009. It has the Court title Giles & Anor v Commonwealth of Australia & Ors (2009/32977). The plaintiffs in the class action are two former students at the School, Ms Geraldine Giles and Mrs Vivian Drady. They are suing each of the Commonwealth of Australia, the State of New South Wales, and the Fairbridge Foundation.

The plaintiffs bring their claims on their own behalf, and on behalf of all other persons who fit the definition of “group members” in the class action. This definition is set out below. The plaintiffs allege that the three defendants breached various legal duties which they owed to some or all of the group members. The plaintiffs claim compensation, for themselves and on behalf of the group members. The claims made by the plaintiffs are set out in a “Second Amended Statement of Claim” which has been filed in the Court. Each of the defendants denies that it is liable to the plaintiffs or to the group members. The defendants have filed “defences” which set out the grounds on which they dispute the plaintiffs’ claims. Copies of the Second Amended Statement of Claim, and each defendant’s Defence, may be inspected on the website of the plaintiffs’ solicitors, Slater [page 652] and Gordon. The website address is http://www.slatergordon.com.au/class-ac‐ tions/current-class-actions/fairbridge-farm-school.

Who are the “group members”? The group members who are represented in the class action are defined as all persons who: (a) as children were residents of the Fairbridge Farm School (“Fairbridge”) between 1937 and 1974; and (b) were physically or sexually assaulted while residents at Fairbridge; and (c) suffered an injury (including psychological or psychiatric injury) or disability as a result of that physical or sexual abuse. If you fit that definition then you are automatically a group member in the class action. If so, then it is essential that you read the rest of this notice very carefully. This notice explains ways in which the class action is likely to affect your legal rights, especially your rights to claim compensation from the defendants.

If you are not sure whether you are a group member in the class action, you should contact Slater and Gordon (address below) or seek independent legal advice. You should do this immediately because there are deadlines for you to take steps to protect your rights.

Proposed settlement of the class action Following mediation in May 2015, the plaintiffs and the defendants agreed upon terms for the settlement of the class action. In summary, the defendants have agreed to pay an amount of $24,000,000 (twenty-four million dollars) to be shared among eligible group members, according to a claims-compensation scheme. Because of the Supreme Court’s rules for class actions, the settlement agreement between the plaintiffs and the defendants cannot take effect unless and until it is approved by the Court. The Supreme Court has examined the proposed settlement agreement (called a “Deed”) and the arrangements which the plaintiffs’ solicitors have proposed for assessing group members’ individual claims and sharing the compensation sum between them (called a “Settlement Distribution Scheme” or “Scheme”). The Court has made a preliminary assessment that the Deed and the Scheme appear to be reasonable, such that they should be approved by the Court and permitted to take effect. But before making a final determination about those matters, the Court has ordered that this notice be published to inform the group members about the settlement and give them an opportunity to make an objection to the settlement, if they wish. Also, the Court and the parties need to know which persons who fit the definition of “group members” (above) actually want to claim compensation from the [page 653] defendants. For that reason, the Court has ordered that group members who

wish to claim compensation must register their claims by a deadline, explained below.

What group members must do If you fit the definition of a group member (above) then there are three (3) options which you must consider. Option A

Option B

Option C

If you want to claim compensation then you must “register” as a group member, by completing the “Fairbridge Group Member Registration Form” which is Annexure A to this Notice. You must return the Form to Slater and Gordon before 4pm on 24 July 2015, otherwise you will be deemed to have chosen Option C below. If you want to object to the proposed settlement then you must complete the “Notice of Objection to Proposed Settlement” which is Annexure B to this Notice. You must return the Notice to Slater and Gordon before 4pm on 24 July 2015 and be ready to come to Court to argue your objection. Please note: even if you take this Option B, you should still also take Option A to ensure that you are treated as a registered group member even if your objection to the settlement is overruled by the Court. Do nothing. If you do not register according to Option A by the deadline, you will remain a group member for all purposes of the proceeding, but if there is any settlement of the proceeding you will not be able to claim compensation in the settlement. This means you will lose all rights to compensation from the defendants, in return for nil compensation. (If there is not a settlement, and the class action goes to judgment, then you might be able to claim compensation under the judgment.)

To repeat, even if you want to object to the settlement under Option B, you should still register under Option A in case your objection is overruled and the settlement takes effect. Please consider your options carefully. If you are not sure what to do, you must contact Slater and Gordon or seek independent legal advice. You must act quickly because the deadline for registrations (or objections) is 4pm on 24 July 2015.

Will group members be liable for legal costs under the settlement? The costs which the plaintiffs have incurred in running the class action for the benefit of all of the eligible group members will be paid out of the overall

[page 654] compensation sum received from the defendants. There will not be any additional liability, in respect of those costs, for group members. In relation to the costs associated with assessing each group member’s entitlement to compensation, the Settlement Distribution Scheme proposes a procedure for assessing individual claims according to various guidelines. Those assessed values will then form the basis on which the overall compensation fund will be shared “proportionately” between eligible group members. The assessment procedures are intended to minimise the overall costs of the process, and also minimise the need for group members to engage separate lawyers to represent them. It is expected that most group members will not need or want to engage separate lawyers. For those group members the costs of having their claims assessed will be paid as “administration costs” of the Scheme. Group members will be entitled to engage separate lawyers to represent them in the claims assessment process, if they wish, but they will need to pay the costs charged by those lawyers.

What will happen in the coming weeks? The Court has ordered that any objections to the proposed settlement (from group members who take Option B above) will be heard by the Court at Law Courts Building, 184 Phillip Street, Sydney NSW, at 10:00am on 21 August 2015. If there are no objections, or the objections are overruled, then the proposed settlement will be given final approval by the Court. It will then take effect. When it takes effect, group members who have registered claims (Option A) above will have their claims assessed to determine their compensation entitlements. Group members who did not register will lose their rights to claim compensation from the defendants in respect of the matters covered by the class action.

Addresses for questions and forms

If you have any questions about the proposed settlement or this notice, you can contact Slater & Gordon at any time, or seek your own independent legal advice. If you decide to register a claim for compensation, and/or submit an objection to the Court approving the proposed settlement, you should send your Annexure A form or Annexure B form to one of the following addresses: Supreme Court Registry

Supreme Court of NSW GPO Box 3 Sydney NSW 2001

Slater and Gordon

Mail: Attn: Fairbridge Farm Class Action Slater & Gordon GPO Box 1584 SYDNEY NSW 2001 Phone: (02) 8267 0660 Email: [email protected]

[page 655]

• SHAREHOLDER CLASS ACTION • [Settlement Notice to Registered Group Members]

NOTICE OF PROPOSED SETTLEMENT FEDERAL COURT OF AUSTRALIA ALLCO FINANCE GROUP CLASS ACTION Blairgowrie Trading Ltd & Ors v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) & Ors NSD 1609 of 2013 This notice contains important information about the Allco Finance Group Class Action (Allco Class Action) proceeding which is currently pending in the Federal Court of Australia.

You should read this notice carefully. If there is anything that you do not understand, you should seek legal advice. On 16 February 2017 the Court will be asked to approve a proposed settlement of the Allco Class Action. If approved, the settlement will affect the legal rights of group members in the Allco Class Action. If you wish to make submissions opposing the proposed settlement, you must take the steps referred to in section 4 of this notice. The Federal Court of Australia has ordered that this notice be sent to those group members in the Allco Class Action who, on or prior to 4 November 2016, had registered their claims with, and provided share trading information to, Maurice Blackburn (Registered Group Members). A separate notice has been sent to those group members in the Allco Class Action who, on or prior to 4 November 2016, had not registered their claims with, and provided share trading information to, Maurice Blackburn (Unregistered Group Members). 1.

BACKGROUND TO THE ALLCO CLASS ACTION The Allco Class Action was commenced in the Federal Court of Australia on 8 August 2013 by Blairgowrie Trading Ltd and Alan & Chrystine Flitcroft (Applicants) against Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (AFG) and KPMG (collectively, the Respondents). The action arises out of a claim that the Respondents either contravened the continuous disclosure requirements of the Corporations Act 2001 (Cth), or otherwise made statements that were misleading or deceptive, thereby causing loss to persons who acquired an interest in ordinary shares in AFG during the period 21 August 2007 to 27 February 2008 (Relevant Period). The Respondents to the Allco Class Action (AFG and KPMG) have denied the allegations, and defended the action. [page 656] The Applicants are represented by solicitors Maurice Blackburn, and

the action is being funded by International Litigation Funding Partners Pte Ltd (ILFP). 2.

PROPOSED SETTLEMENT OF THE ALLCO CLASS ACTION The parties to the Allco Class Action have agreed on terms for the settlement of the action. Settlement cannot be concluded until the Court approves the settlement. Under the terms of the proposed settlement, the Respondents are to pay (on a without admissions basis) a settlement amount: of $30 million to settle the claims of Registered Group Members and a portion of the claims of Unregistered Group Members (other than those Registered and Unregistered Group Members who were ‘related parties’ of AFG) (Tier 1 Settlement Amount); and a further amount of up to $10 million to settle the claims of any other Unregistered Group Members (other than those Unregistered Group Members who were ‘related parties’ of AFG) (Tier 2 Settlement Amount) – the precise amount of the Tier 2 Settlement Amount (if any) will depend upon: (i) the number of Unregistered Group Members who, prior to the applicable deadline, register their claims and provide share trading information to Maurice Blackburn; and (ii) the numbers of shares which those persons acquired and sold during the period 21 August 2007 to 10 February 2008. The process by which the Tier 1 Settlement Amount and the Tier 2 Settlement Amount (if any) is proposed (subject to Court approval) to be distributed will be outlined in a ‘Settlement Distribution Scheme’ which can be inspected at the offices of Maurice Blackburn, Level 10, 456 Lonsdale Street, Melbourne, Victoria from 16 December 2016 between the hours of 9.00 am and 5.00 pm Monday to Friday, or a copy will be provided on request by Maurice Blackburn. Any loss assessment formula which may be referred to in the Settlement Distribution Scheme will also be made available on request to Maurice Blackburn, subject to an undertaking of confidentiality.

For the settlement to take effect, it must be approved by the Court under s 33V of the Federal Court of Australia Act 1976 (Cth). If the settlement is not approved by the Court, the Allco Class Action will continue. As part of the settlement approval, the Applicants also propose to seek orders which would have the effect that the costs of the proceeding be deducted proportionately from the Tier 1 Settlement Amount and the Tier 2 Settlement Amount prior to any distributions to group members, such that all group members bear a proportionate share of those costs. For this purpose, [page 657] ‘costs’ includes Maurice Blackburn’s legal costs, and also any entitlements of the funder of the proceeding (ILFP) pursuant to funding agreements which it entered into with Registered Group Members and/or pursuant to orders of the Court via a ‘common fund’ mechanism. As advised in previous notices to group members, for the purpose of funding the Allco Class Action, the Applicants and some group members entered into Funding Agreements with ILFP, the terms of which included that: ILFP would pay part of the costs incurred in conducting the Allco Class Action (with the balance of those costs to be paid upon a successful outcome); ILFP would pay any adverse costs orders which were made in the Allco Class Action; and at the conclusion of the Allco Class Action (whether by settlement or judgment), ILFP would be entitled to receive, as a first priority out of that person’s share of the settlement or judgment amount: (i) reimbursement of that person’s share of the amounts paid by ILFP under the Funding Agreements (which includes legal costs and

disbursements); and (ii) a commission, being a percentage of that person’s share of the settlement or judgment amount, which would vary for each group member depending on how many shares in AFG they held. Relevantly, the percentages were: Number of Shares Held < 1,000,000 > or = 1,000,000

Resolution after 30 June 2015 35% 32.5%

(If you wish to see the full terms of the Funding Agreements, you may contact Maurice Blackburn by email or telephone as set out below.) The Applicants propose to seek orders from the Court which would have the effect that the above funding arrangements will apply to all group members who have not opted out of the Allco Class Action and who have registered, or subsequently register, to participate in the proposed settlement (irrespective of whether they have entered into a Funding Agreement with ILFP), but with a reduced funding commission applicable to all group members of 30% of the net amount remaining after reimbursement of costs (which is a reduction from the amounts set out in the above table, being up to 35% of the gross amount before reimbursement of costs) (Common Fund Orders). Assuming costs of approximately $10 million, this would equate to a commission to ILFP of between $6 million (if the Tier 2 Settlement Amount is zero – i.e. ($30m – $10m) x 30%) and $9 million (if the Tier 2 Settlement Amount is $10 million – i.e. ($40m – $10m) x 30%). However, ILFP and Maurice Blackburn have determined to defer part of the commission and [page 658] legal costs to ensure that the amount available for distribution to group members represents at least 50% of the total settlement sum. Thus, if the Tier 2 Settlement Sum is zero, a maximum of $15 million will be deducted from the Tier 1 Settlement Sum on account of costs and

commission. If the Tier 2 Settlement Sum is greater than zero, any costs and commission above $15 million may be deducted, but the total costs and commission will never exceed 50% of the total settlement sum. Full details will be set out in the ‘Settlement Distribution Scheme’ which, as noted above, can be inspected at the offices of Maurice Blackburn, or a copy will be provided on request. The Applicants previously applied for similar orders. Those orders were opposed by the Respondents and the Federal Court declined to make the orders at that stage of the Allco Class Action (but did not rule out the possibility of making such orders at a later stage of the action). A copy of the Court’s earlier decision is available on the website of the Applicants’ solicitors (www.mauriceblackburn.com.au/allco). It is possible that the Court may make no order, or other orders, in respect of funding arrangements. An example of an alternative order is an “equalisation order”, which would result in ILFP being paid only the total amount to which it is entitled under the funding arrangements it has actually agreed with group members, but that amount being shared across all group members rather than only those who have entered the funding arrangements. Whatever orders the Court makes (if any), group members will not be required to pay any amounts to ILFP (or to Maurice Blackburn) otherwise than as a deduction from their entitlements under the proposed settlement (and under no circumstances will they exceed those entitlements). Thus, no group member will be ‘out-of-pocket’ as a result of such orders. Full details of the proposed common fund mechanism will be set out in the ‘Settlement Distribution Scheme’ which, as noted above, can be inspected at the offices of Maurice Blackburn, or a copy will be provided on request. 3.

WHO THIS NOTICE AFFECTS This notice affects the applicants and group members in the Allco Class

Action. You are receiving this notice because you are a Registered Group Member (that is, you previously registered your claim with, and provided your share trading information to, Maurice Blackburn). There is nothing which you need to do at this stage in order to progress your claim or participate in the proposed settlement. Maurice Blackburn will be in touch with you soon to outline your expected entitlement (if any) from the Tier 1 Settlement Amount. [page 659] 4.

IF YOU WISH TO MAKE SUBMISSIONS OPPOSING THE SETTLEMENT If you wish to make submissions on why the Court should not approve the above settlement, the Common Fund Orders, or if the Common Fund Orders were made, the percentage of the funding commission payable to ILFP, you are required to file with the Court, and serve on Maurice Blackburn, by no later than 2 February 2017, any affidavit evidence relied upon in opposition to the settlement, together with a written outline of your grounds for opposing the proposed settlement. The address for Maurice Blackburn is: Level 10 456 Lonsdale Street Melbourne Vic 3000 (Attention: Steven Foale) The address for the Court is: Re Allco Class Action NSD 1609/2013 Federal Court of Australia

New South Wales District Registry Locked Bag A6000 Sydney South NSW 1235 You may also attend and make submissions to the Court at the hearing of the application for approval of the proposed settlement. That hearing has been scheduled for 16 February 2017 at 10.15 am in Sydney. If you have any questions in relation to the above, or wish to obtain copies of relevant documents, you should contact Maurice Blackburn by email: [email protected], or telephone: (03) 8102 2007, or seek your own legal advice without delay. [page 660]

Schedule C [Settlement Notice to Unregistered Group Members]

NOTICE OF PROPOSED SETTLEMENT FEDERAL COURT OF AUSTRALIA ALLCO FINANCE GROUP CLASS ACTION Blairgowrie Trading Ltd & Ors v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) & Ors NSD 1609 of 2013 This notice contains important information about the Allco Finance Group Class Action (Allco Class Action) proceeding which is currently pending in the Federal Court of Australia. You should read this notice carefully. If there is anything that you do not understand, you should seek legal advice. On 16 February 2017 the Court will be asked to approve a proposed

settlement of the Allco Class Action. If approved, the settlement will affect the legal rights of group members in the Allco Class Action. If you wish to make submissions opposing the proposed settlement, you must take the steps referred to in section 4 of this notice. IF YOU WISH TO PARTICIPATE IN THE SETTLEMENT, YOU NEED TO TAKE STEPS TO DO SO BY FILLING OUT A GROUP MEMBER REGISTRATION FORM AS EXPLAINED IN SECTION 3 OF THIS NOTICE The Federal Court of Australia has ordered that this notice be sent to those group members in the Allco Class Action who, on or prior to 4 November 2016, had not registered their claims with, and provided share trading information to, Maurice Blackburn (Unregistered Group Members). A separate notice has been sent to persons who have already registered their claims with, and provided share trading information to, Maurice Blackburn (Registered Group Members). 1.

BACKGROUND TO THE ALLCO CLASS ACTION The Allco Class Action was commenced in the Federal Court of Australia on 8 August 2013 by Blairgowrie Trading Ltd and Alan & Chrystine Flitcroft (Applicants) against Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (AFG) and KPMG (collectively, the Respondents). The action arises out of a claim that the Respondents either contravened the continuous disclosure requirements of the Corporations Act 2001 (Cth), or otherwise made statements that were misleading or deceptive, thereby causing loss to persons who acquired an interest in ordinary shares in AFG during the period 21 August 2007 to 27 February 2008 (Relevant Period). The Respondents to [page 661] the Allco Class Action (AFG and KPMG) have denied the allegations, and defended the action.

The Applicants are represented by solicitors Maurice Blackburn, and the action is being funded by International Litigation Funding Partners Pte Ltd (ILFP). 2.

PROPOSED SETTLEMENT OF THE ALLCO CLASS ACTION The parties to the Allco Class Action have agreed on terms for the settlement of the action. Settlement cannot be concluded until the Court approves the settlement. Under the terms of the proposed settlement, the Respondents are to pay (on a without admissions basis) a settlement amount: of $30 million to settle the claims of Registered Group Members and a portion of the claims of Unregistered Group Members (other than those Registered and Unregistered Group Members who were ‘related parties’ of AFG) (Tier 1 Settlement Amount); and a further amount of up to $10 million to settle the claims of any other Unregistered Group Members (other than those Unregistered Group Members who were ‘related parties’ of AFG) (Tier 2 Settlement Amount) – the precise amount of the Tier 2 Settlement Amount (if any) will depend upon: (i) the number of Unregistered Group Members who, prior to the applicable deadline, register their claims and provide share trading information to Maurice Blackburn; and (ii) the numbers of shares which those persons acquired and sold during the period 21 August 2007 to 10 February 2008. The process by which the Tier 1 Settlement Amount and the Tier 2 Settlement Amount (if any) is proposed (subject to Court approval) to be distributed will be outlined in a ‘Settlement Distribution Scheme’ which can be inspected at the offices of Maurice Blackburn, Level 10, 456 Lonsdale Street, Melbourne, Victoria from 16 December 2016 between the hours of 9.00 am and 5.00 pm Monday to Friday, or a copy will be provided on request by Maurice Blackburn. Any loss assessment formula which may be referred to in the Settlement Distribution

Scheme will also be made available on request to Maurice Blackburn, subject to an undertaking of confidentiality. For the settlement to take effect, it must be approved by the Court under s 33V of the Federal Court of Australia Act 1976 (Cth). If the settlement is not approved by the Court, the Allco Class Action will continue. As part of the settlement approval, the Applicants also propose to seek orders which would have the effect that the costs of the proceeding be deducted proportionately from the Tier 1 Settlement Amount and the Tier 2 [page 662] Settlement Amount prior to any distributions to group members, such that all group members bear a proportionate share of those costs. For this purpose, ‘costs’ includes Maurice Blackburn’s legal costs, and also any entitlements of the funder of the proceeding (ILFP) pursuant to funding agreements which it entered into with Registered Group Members and/or pursuant to orders of the Court via a ‘common fund’ mechanism. As advised in previous notices to group members, for the purpose of funding the Allco Class Action, the Applicants and some group members entered into Funding Agreements with ILFP, the terms of which included that: ILFP would pay part of the costs incurred in conducting the Allco Class Action (with the balance of those costs to be paid upon a successful outcome); ILFP would pay any adverse costs orders which were made in the Allco Class Action; and at the conclusion of the Allco Class Action (whether by settlement or judgment), ILFP would be entitled to receive, as a first priority out

of that person’s share of the settlement or judgment amount: (i) reimbursement of that person’s share of the amounts paid by ILFP under the Funding Agreements (which includes legal costs and disbursements); and (ii) a commission, being a percentage of that person’s share of the settlement or judgment amount, which would vary for each group member depending on how many shares in AFG they held. Relevantly, the percentages were: Number of Shares Held < 1,000,000 > or = 1,000,000

Resolution after 30 June 2015 35% 32.5%

(If you wish to see the full terms of the Funding Agreements, you may contact Maurice Blackburn by email or telephone as set out below.) The Applicants propose to seek orders from the Court which would have the effect that the above funding arrangements will apply to all group members who have not opted out of the Allco Class Action and who have registered, or subsequently register, to participate in the proposed settlement (irrespective of whether they have entered into a Funding Agreement with ILFP), but with a reduced funding commission applicable to all group members of 30% of the net amount remaining after reimbursement of costs (which is a reduction from the amounts set out in the above table, being up to 35% of the gross amount before reimbursement of costs) (Common Fund Orders). Assuming costs of approximately $10 million, this would equate to a commission to ILFP of between $6 million (if the Tier 2 Settlement Amount is zero – i.e. ($30m – $10m) x 30%) and $9 million (if the Tier 2 Settlement Amount is $10 million – i.e. ($40m – $10m) x 30%). However, ILFP and [page 663] Maurice Blackburn have determined to defer part of the commission and legal costs to ensure that the amount available for distribution to

group members represents at least 50% of the total settlement sum. Thus, if the Tier 2 Settlement Sum is zero, a maximum of $15 million will be deducted from the Tier 1 Settlement Sum on account of costs and commission. If the Tier 2 Settlement Sum is greater than zero, any costs and commission above $15 million may be deducted, but the total costs and commission will never exceed 50% of the total settlement sum. Full details will be set out in the ‘Settlement Distribution Scheme’ which, as noted above, can be inspected at the offices of Maurice Blackburn, or a copy will be provided on request. The Applicants previously applied for similar orders. Those orders were opposed by the Respondents and the Federal Court declined to make the orders at that stage of the Allco Class Action (but did not rule out the possibility of making such orders at a later stage of the action). A copy of the Court’s earlier decision is available on the website of the Applicants’ solicitors (www.mauriceblackburn.com.au/allco). It is possible that the Court may make no order, or other orders, in respect of funding arrangements. An example of an alternative order is an “equalisation order”, which would result in ILFP being paid only the total amount to which it is entitled under the funding arrangements it has actually agreed with group members, but that amount being shared across all group members rather than only those who have entered the funding arrangements. Whatever orders the Court makes (if any), group members will not be required to pay any amounts to ILFP (or to Maurice Blackburn) otherwise than as a deduction from their entitlements under the proposed settlement (and under no circumstances will they exceed those entitlements). Thus, no group member will be ‘out-of-pocket’ as a result of such orders. Full details of the proposed common fund mechanism will be set out in the ‘Settlement Distribution Scheme’ which, as noted above, can be inspected at the offices of Maurice Blackburn, or a copy will be provided on request.

3.

WHO THIS NOTICE AFFECTS You are receiving this notice because you have been identified as a person who: may have, at some time during the period 21 August 2007 to 10 February 2008), acquired an interest in ordinary shares in Allco Finance Group Ltd (ASX code: AFG); and have not registered your claim with, and provided share trading information to, Maurice Blackburn. [page 664] If you did acquire an interest in ordinary shares in Allco Finance Group Ltd at some time during that period, and you wish to make a claim from the settlement amount, you must register your claim with, and provide share trading information to, Maurice Blackburn. There are no costs involved in registering your claim. Once your claim has been received, Maurice Blackburn will be in touch with you soon to outline your expected entitlement (if any) from the Tier 2 Settlement Amount. HOW TO REGISTER YOUR CLAIM 1.

Online Complete the online registration form at www.mauriceblackburn.com.au/allco

2.

Mail Complete and return the enclosed registration form to:

Maurice Blackburn

Level 10, 456 Lonsdale Street Melbourne VIC 3000 Attention: Steven Foale If you do wish to register your claim, you must act promptly – the Tier 2 Settlement Amount will be distributed on a ‘first come, first served’ basis. Registrations will close on 30 June 2017, or as soon as registrations by Unregistered Group Members are such as to exhaust the Tier 2 Settlement Amount (whichever is earlier). If you do not register your claim, and the settlement is approved by the Court, you will still be bound by the settlement, but will not be entitled to receive any money from the settlement. 4.

IF YOU WISH TO MAKE SUBMISSIONS OPPOSING THE SETTLEMENT Alternatively, if you wish to make submissions on why the Court should not approve the above settlement, the Common Fund Orders, or if the Common Fund Orders were made, the percentage of the funding commission payable to ILFP, you are required to file with the Court, and serve on Maurice Blackburn, by no later than 2 February 2017, any affidavit evidence relied upon in opposition to the settlement, together with a written outline of your grounds for opposing the proposed settlement. [page 665] The address for Maurice Blackburn is: Level 10 456 Lonsdale Street

Melbourne Vic 3000 (Attention: Steven Foale) The address for the Court is: Re Allco Class Action NSD 1609/2013 Federal Court of Australia New South Wales District Registry Locked Bag A6000 Sydney South NSW 1235 You may also attend and make submissions to the Court at the hearing of the application for approval of the proposed settlement. That hearing has been scheduled for 16 February 2017 at 10.15 am in Sydney. If you have any questions in relation to the above, or wish to obtain copies of relevant documents, you should contact Maurice Blackburn by email: [email protected], or telephone: (03) 8102 2007, or seek your own legal advice without delay.

• SHAREHOLDER CLASS ACTION • NEWCREST MINING CLASS ACTION (VID 406/2014) NOTICE OF PROPOSED SETTLEMENT This notice contains important information about the proposed settlement of the class action against Newcrest Mining Limited (Newcrest).

The Federal Court of Australia has approved this notice and ordered that it be distributed to Registered Group Members in the Newcrest class action. Newcrest has agreed to pay a total of AUD$36 million to settle the class action, subject to court approval. At 10:15am on 14 April 2016, Australian Eastern Standard Time (AEST), the Court will be asked to approve the proposed settlement of the class action. [page 666] If you do not oppose the proposed settlement, no action is required. However, if you wish to oppose the proposed settlement, you must take the steps outlined in paragraph 19 of this notice. This is an important legal document and must be read carefully. If you do not understand this notice, you should immediately obtain independent legal advice.

BACKGROUND 1. 2.

The Newcrest class action was commenced in the Federal Court of Australia on 21 July 2014 by Earglow Pty Limited (the Representative). The Representative alleged that: (a) between 13 August 2012 and 6 June 2013 (the Class Period), Newcrest engaged in misleading or deceptive conduct and breached its continuous disclosure obligations in relation to: (i) its forecast gold production for the financial year ending 30 June 2014 through to the financial year ending 30 June 2017; (ii) the recoverable value of certain of its gold mine assets; and (iii) the payment of a final dividend in respect of its securities for

3. 4.

5. 6.

the financial year ending 30 June 2013; (b) Newcrest’s conduct caused its securities to trade on the ASX at artificially inflated prices; and (c) persons who acquired Newcrest securities during the Class Period suffered loss and damage as a result. The Representative claimed damages and other remedies for all group members in the proceeding. Copies of selected court documents (including the most recent Statement of Claim and Defence) can be viewed at: http://www.slatergordon.com.au/class-actions/current-class-actions/new‐ crest-mining. The trial in the class action was scheduled to commence on 29 February 2016 for an estimate of 12-14 weeks. Newcrest defended the class action and the settlement agreement acknowledges that Newcrest makes no admissions as to liability.

PROPOSED SETTLEMENT 7. 8.

9.

On 22 February 2016, the parties notified the Court that they had agreed terms of a proposed settlement and executed a Settlement Deed. If the proposed settlement is approved, Newcrest will pay a Settlement Sum of AUD$36 million, inclusive of interest and legal costs, together with any interest accrued on the account in which the Settlement Sum is to be held for a period of up to 90 days (less any account fees and taxes at the corporate tax rate of 30%). Registered Group Members (RGMs) will be eligible to receive a distribution from the Settlement Sum. These are persons who: [page 667] (a) meet the definition of “Group Members” in the Second Further Amended Statement of Claim; and

validly registered their participation in the proceeding (for the purposes of the Court’s orders dated 29 July 2015, as amended by the orders dated 12 October 2015); and (c) did not file an opt-out notice. [Version A – emailed and pre-paid post] (b)

10. You are receiving this notice because you are recorded as an RGM in this proceeding. If you do not believe that this is correct, please contact Slater and Gordon. [Version B – website] 10. RGMs have been sent a hardcopy and/or an email version of this notice. We encourage you to check your junk mail folder before making further contact.

COURT APPROVAL PROCESS 11. Under section 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), class action settlements must be assessed as fair and reasonable, and then formally approved by the Court. 12. The Court will be asked to review and approve the terms of the settlement agreed by the parties and the proposed Settlement Scheme which will include the loss assessment formula through which distribution entitlements are calculated, the legal costs (which are also subject to independent external review), a funding commission or a funding equalisation mechanism (as applicable), and administration costs. See paragraph 25 below for further details in respect of the legal costs, the funding commission or funding equalisation mechanism, and the administration costs. 13. If the settlement is approved, then:

(a) RGMs will have a right to participate in the distribution of the Settlement Sum; (b) the rights of all group members against Newcrest, in relation to the allegations arising out of or related to the matters that are, were or could have been raised in the proceeding, will be finally resolved. This includes those group members who did not register in the proceeding, and will therefore not be entitled to participate in the distribution, but does not include persons who filed an opt-out notice. Newcrest will also be released from all claims arising out of or related to the matters that are, were or could have been raised in the proceeding; [page 668] (c) Slater and Gordon will be appointed as the Administrators of the proposed Settlement Scheme, and trustees in relation to the Settlement Sum. Under Court supervision, they will be obliged to act impartially and will no longer act as lawyers for individual RGMs; and (d) RGMs’ distribution entitlements will be calculated by the Administrators in accordance with the proposed Settlement Scheme. 14. If the proposed settlement is not approved by the Court, the proceeding will continue.

Unregistered group members are bound by the settlement but receive no compensation 15. On 29 July 2015, the Federal Court of Australia ordered that, by 7 August 2015, Slater and Gordon was required to publish notices informing group members that they must register in the proceeding by 28 August 2015 if they wished to claim compensation. If group members did not register then they would remain bound by the outcome of the proceeding, but would receive no compensation and

would be barred from making any claim against Newcrest in respect of or relating to the subject matter of the proceeding. The notices were published in accordance with the orders.

Access to Settlement Documents 16. RGMs can obtain access to the proposed (and confidential) Settlement Scheme, from anytime after 22 March 2016, by: (a) contacting Slater and Gordon at Newcrest.ClassAction@slatergordon. com.au; and (b) signing and returning a confidentiality undertaking.

WHAT YOU MUST DO [Version A – emailed and pre-paid post] 17. You are receiving this notice because you are recorded as an RGM in this proceeding. If you do not believe that this is correct, please contact Slater and Gordon. [Version B – website] 17. RGMs have been sent a hardcopy and/or an email version of this notice. We encourage you to check your junk mail folder before making further contact.

[page 669] 18. If you wish to support the settlement, there is nothing further you need to do. You will be kept informed about further developments in the

proceeding. You are encouraged to refrain from contacting Slater and Gordon unnecessarily in order to keep costs to a minimum. 19. If you wish to oppose the settlement then you must, by no later than 4:00pm (AEST) on 4 April 2016, complete an objection form (which can be downloaded from Slater and Gordon’s website at http://www.sla‐ tergordon.com.au/class-actions/current-class-actions/newcrest-mining) and (a) send it by email to Slater & Gordon at [email protected]; and (b) file it with the Court by sending it by email to [email protected]. You may attend the approval hearing to explain the basis of your objection to the Judge if you wish to do so. 20. The approval hearing will take place at the Federal Court of Australia, 305 William Street, Melbourne, Victoria at 10:15am (AEST) on 14 April 2016. 21. If you think you might wish to oppose the settlement, you should obtain independent legal advice immediately.

LITIGATION FUNDING 22. As a party to the proceeding, the Representative would have been required to pay Newcrest’s legal costs in the event that the class action was unsuccessful and a costs order was made by the Court against the Representative (an adverse costs order). 23. Comprehensive Legal Funding LLC (CLF) provided litigation funding to the Representative and the majority of RGMs. Under this arrangement, CLF: (a) indemnified the Representative against any adverse costs orders; (b) posted $4,750,000 in bank guarantees to the Federal Court as

security against such an order; and (c) paid legal costs incurred in prosecuting the proceeding, including the cost of solicitors, barristers, consultants and independent experts. 24. By entering into litigation funding agreements with CLF the Representative and the majority of RGMs agreed to reimburse CLF for the legal costs that it paid during the proceeding, and to pay CLF a percentage of any entitlement that they would receive (net of legal costs).

IMPORTANT FEATURES OF THE PROPOSED SCHEME 25. Under the proposed Settlement Scheme: (a) court-approved legal costs (including the Applicant’s own legal costs and other reasonable costs and expenses) will be deducted from the [page 670] Settlement Sum prior to individual RGM entitlements being calculated. The effect of this is that court-approved legal costs will be shared on a pro rata basis by all RGMs irrespective of whether they executed a legal costs agreement with Slater and Gordon; (b) the funding commission for all group members that entered a litigation funding agreement with CLF (“Funded RGMs”) will be deducted from the individual entitlements of those RGMs and paid to CLF. (c) All RGMs that did not enter a litigation funding agreement with CLF (“Non-Funded RGMs”) will be subject to a “funding equalisation mechanism”. The amount of funding commission which would have been payable to CLF by each Non-Funded

RGM had that RGM entered into a funding agreement will be calculated and deducted from the individual entitlement of each Non-Funded RGM. These amounts will be redistributed to all RGMs, including Non-Funded RGMs, on a prorata basis; and (d) court-approved administration costs will be payable first from any interest earned on the Settlement Sum, and then second from the Settlement Sum prior to final distribution. 26. If you wish to oppose these or any other aspects of the proposed settlement you must follow the procedure in paragraph 19. 27. These objections will be considered by the Court, along with submissions from the parties, when assessing whether the proposed settlement is fair and reasonable.

FURTHER INFORMATION 28. If you need further information about the proposed settlement, please contact Slater and Gordon on (03) 9602 8657, or by email to [email protected].

Notice of Objection to Proposed Settlement

NEWCREST CLASS ACTION No VID 406 of 2014 TO: (a) Slater & Gordon, by email to [email protected]; and (b) The Federal Court of Australia, by email to [email protected] The person identified below gives notice pursuant to paragraph 8 of the

orders of Justice Beach made on 24 February 2016 that the person OBJECTS to the proposed settlement of this proceeding. [page 671]

A

DETAILS OF OBJECTOR

Name: ACN/ABN [if company]: Capacity [eg, individual, partnership, trustee/agent]: Telephone: Email: Postal address: Total number of Newcrest securities acquired by the objector during the period 13 August 2012 to 6 June 2013 (inclusive):

B

GROUND(S) OF OBJECTION

My submissions in support of my objection to the proposed settlement are as follows [set out in the space below any submissions you wish to make, attach additional pages if necessary]:

C

ATTENDANCE AT HEARING AT 10:15am (AEST) ON 14 APRIL 2016 I intend to appear before the Court at the hearing at 10:15am (AEST) ON 14 APRIL 2016

[If you intend to appear, please complete the following]: I will appear on my own behalf I will be represented by a lawyer: ................................................... I do not intend to appear, but wish for my submissions to be considered in my absence

[page 672] Signed: Name of person signing: Position [if applicable]: Date: Second signature [if company]: Name of person signing: Position [if applicable]: Date:

• MEDICAL DEVICE CLASS ACTION • NOTICE OF PROPOSED SETTLEMENT DePuy ASR Class Action in the Federal Court of Australia On 31 March 2016, the parties in the DePuy ASR class action agreed on terms for a provisional settlement of the case for $250 million plus interest, without admission of liability. The settlement is subject to approval by the Federal Court of Australia. This notice contains important information about the proposed settlement. It also explains what Group Members must do to claim compensation in the settlement. If you are a Group Member in the class action, your legal rights will be affected by the settlement. More information about the ASR class action and the proposed settlement are contained in the attached overview.

Please read this notice carefully. If you do not understand the notice or you have any questions, you should contact the lawyers for the applicants in this class action, Maurice Blackburn or Shine, or seek independent legal advice. The Federal Court is not able to answer questions about the settlement.

WHAT GROUP MEMBERS NEED TO DO Group Members who want to claim compensation in the settlement must register online at the following website: www.depuyclassaction.com.au Under the proposed settlement, Group Members will be eligible to receive compensation if they satisfy certain eligibility criteria that are outlined in the attached overview. The most important of these is that Group Members must have had (or in the future have) revision of their ASR hip implant within ten years of it being implanted. The deadlines for online registration are as follows. Failure to comply with these deadlines may result in rejection of your claim. [page 673] Date of revision 30 April 2016 or earlier 1 May 2016 or later

Deadline for registration 31 October 2016 No later than six months after the date of the revision surgery

COURT APPROVAL OF THE PROPOSED SETTLEMENT On 24 June 2016, the Federal Court will be asked to approve the proposed settlement. Group Members may attend this hearing if they wish, although they are not required to do so. The application will be heard at the Federal Court of Australia in Sydney, in the Law Courts Building at Queens Square. If you wish to oppose or object to the proposed settlement, you:

a) b)

must, by 10 June 2016, send written notice to Maurice Blackburn or Shine explaining the reasons why you oppose the settlement; may, on 24 June 2016, attend (or send a representative to attend) the settlement approval hearing in the Federal Court and explain why you think that the settlement should not be approved.

CONTACT DETAILS Contact details for Maurice Blackburn or Shine are as follows: Maurice Blackburn Lawyers

Shine Lawyers

www.mauriceblackburn.com.au

www.shine.com.au

1800 625 669 (toll free)

13 11 99

OVERVIEW OF THE ASR CLASS ACTION AND PROPOSED SETTLEMENT What is the ASR class action? The ASR class action was brought by Tammy Stanford and Jamie Dunsmore (the Applicants) in their own right and on behalf of all “Group Members” in relation to alleged defects of the ASR hip implants. The ASR class action was brought against two companies (the Respondents): 1.

DEPUY INTERNATIONAL LTD (DEPUY), WHICH DESIGNED AND MANUFACTURED THE ASR HIP IMPLANTS; AND

2.

JOHNSON & JOHNSON MEDICAL PTY LTD (JJM), WHICH DISTRIBUTED THE ASR HIP IMPLANTS IN AUSTRALIA. [page 674]

The Applicants claimed that the ASR hip implants were defective, not fit for purpose and/or not of merchantable quality, in contravention of the Trade Practices Act. The Applicants also alleged negligence in the design, manufacture and supply of the ASR hip implants. As a result of these allegations, the Applicants claimed compensation for themselves and for Group Members who suffered loss or damage as a result of the ASR hip implants. Both Respondents denied the allegations and defended the ASR class action, which culminated in a 17 week trial in the Federal Court of Australia in the first half of 2015. As at 31 March 2016, the Federal Court had not handed down a judgment. Copies of the statement of claim and defences in the class action can be downloaded from www.depuyclassaction.com.au or from the websites of Maurice Blackburn or Shine. On 31 March 2016, the parties in the ASR class action agreed on terms for a provisional settlement on a “no admissions” basis.

Who are Group Members? You are a Group Member if you had surgery in Australia to implant one or more ASR hip implants. There are two types of ASR hip implants: 1.

THE DEPUY ASR HIP RESURFACING SYSTEM (USED IN HIP RESURFACING);

2.

THE DEPUY ASR XL ACETABULAR SYSTEM (USED IN TOTAL HIP REPLACEMENT).

You are no longer a Group Member if you opted out of the class action. If you are unsure whether you are a Group Member, you should contact Maurice Blackburn or Shine or seek independent legal advice.

Proposed settlement of the ASR class action

The parties and lawyers involved in the ASR class action have reached an agreement for the settlement of the class action. The proposed settlement will not take effect unless and until after it is approved by the Federal Court and there is no appeal against the settlement approval. If the proposed settlement is approved, DePuy and JJM will pay an amount of $250 million plus interest. In addition, the Respondents will be responsible for paying certain categories of “liens”, which are claims against Group Members by third parties (such as private health insurers or Medicare) for recoupment of health care costs that were paid by the third parties for the benefit of Group Members who had revision surgery and other medical treatment. [page 675] If the Federal Court approves the proposed settlement, the settlement sum will be distributed as follows: 1.

2.

3.

FIRST, REIMBURSEMENT PAYMENTS TO THE APPLICANTS, MARY BEENTJES AND ROBERT WEBB WILL BE DEDUCTED FROM THE SETTLEMENT SUM – THESE PAYMENTS ARE FOR MODEST AMOUNTS THAT ARE INTENDED TO REIMBURSE THE APPLICANTS, MS BEENTJES AND MR WEBB FOR THE TIME THEY SPENT IN PROSECUTING AND PURSUING THE ASR CLASS ACTION FOR THE BENEFIT OF GROUP MEMBERS; AND NEXT, THE APPLICANTS’ LEGAL COSTS WILL BE DEDUCTED FROM THE SETTLEMENT SUM – THESE LEGAL COSTS ARE CURRENTLY ESTIMATED TO BE $36M, AND WILL ONLY BE PAID TO THE EXTENT THAT THEY ARE BOTH VERIFIED BY AN INDEPENDENT COSTS EXPERT AS BEING REASONABLE AND THEY ARE APPROVED BY THE FEDERAL COURT; THE BALANCE OF THE SETTLEMENT SUM WILL BE USED TO COMPENSATE GROUP MEMBERS IN ACCORDANCE

WITH THE SETTLEMENT SCHEME, TO PAY ANY LIENS THAT ARE NOT THE RESPONSIBILITY OF THE RESPONDENTS, AND TO PAY FOR THE COSTS OF ADMINISTERING THE SETTLEMENT SCHEME. The settlement sum of $250 million, plus interest, will be held in an interest earning bank account until payments need to be paid. Interest that is earned on the settlement sum will increase the amount of funds available to compensate Group Members and to pay administration costs. Maurice Blackburn and Shine, will be the “administrators” of the settlement. Both firms will be responsible for the administration of the Settlement Scheme. The Settlement Scheme is a document that sets out the process for Group Members to claim compensation and for claims to be assessed, quantified and paid. The Settlement Scheme is available to download from the websites of Maurice Blackburn, Shine, Duncan Basheer Hannon and Lempriere Abbott McLeod, or from the following website: www.depuyclassaction.com.au Group Members may also request a copy of the Settlement Deed from Maurice Blackburn or Shine.

Is the settlement an admission by DePuy or JJM? The settlement was agreed by the parties on the basis that DePuy and JJM did not admit any liability or wrongdoing. [page 676]

Who is eligible to be compensated? Not all Group Members will be eligible to receive compensation under the proposed settlement. The most important factor is that Group Members will only be compensated if they have had revision (or in the future need to have revision) of their ASR hip implant. The Settlement Scheme sets out the eligibility criteria that must be met

before a Group Member will be assessed as eligible to receive compensation. These eligibility criteria are as follows: 1. THE GROUP MEMBER WAS IMPLANTED WITH ONE OR MORE ASR HIP IMPLANTS IN AUSTRALIA; 2. THE GROUP MEMBER HAS HAD A REVISION OF AN ASR HIP IMPLANT INVOLVING REMOVAL OF THE ACETABULAR CUP; 3. THE REVISION SURGERY OCCURRED WITHIN 10 YEARS OF THE GROUP MEMBER’S ASR HIP IMPLANT BEING SURGICALLY IMPLANTED; 4. THE REVISION SURGERY WAS NOT PERFORMED DUE THE FOLLOWING FACTORS THAT ARE UNRELATED TO THE DESIGN OR FUNCTIONALITY OF THE ASR HIP IMPLANTS: (a) fracture of the femoral neck within 6 months of an ASR hip resurfacing implant being implanted, unless the fracture was caused by an adverse reaction to metal debris; or (b) infection within 18 months of an ASR hip implant being implanted, unless the revision would have been needed anyway; or (c) trauma (such as a car accident) affecting the alignment or position of an ASR hip implant, unless the revision would have been needed anyway; and 5. THE GROUP MEMBER HAS NOT: (a) opted out of the ASR class action; or (b) previously accepted a final offer of compensation from the Respondents, including a settlement offer made through its Compensation Programme, administered by Crawford & Co. This does not include payments by Crawford & Co for reimbursement of medical expenses under the Reimbursement Programme. If Group Members do not yet satisfy these eligibility criteria, they can still make a claim in the future, if they satisfy these eligibility criteria in the future. For example, if a Group Member’s ASR hip implant surgery occurred on 1 March 2009, and she then undergoes revision eight years later on 1

March 2017, the Group Member will become eligible to receive compensation (assuming that she also satisfies the other eligibility criteria). In this example, she will need to register her claim no later than 1 September 2017. [page 677]

How many Group Members are likely to make a claim? After taking into account the number of ASR patients who have already opted out of the ASR class action, it is estimated that there are approximately 1,400 Group Members who have already had revision surgery to remove their ASR hip implant. It is estimated that another 300 or so Group Members will become eligible to receive compensation as a result of revisions in the future.

What is the process for making a claim and receiving compensation? The Settlement Scheme sets out the process for making and assessing claims by Group Members. Broadly, claims will be assessed pursuant to a streamlined, non-adversarial process involving the following steps: 1.

2.

3.

GROUP MEMBERS WILL NEED TO REGISTER THEIR CLAIM WITHIN THE TIME LIMITS SPECIFIED ON THE FIRST PAGE OF THIS NOTICE. THE DEADLINES VARY DEPENDING ON WHEN GROUP MEMBERS UNDERWENT REVISION. CLAIMS CAN BE REGISTERED AT ANY TIME PROVIDED THAT THEY COMPLY WITH THE DEADLINES. THE SETTLEMENT ADMINISTRATORS WILL OBTAIN MEDICAL RECORDS AND OTHER DOCUMENTS RELEVANT TO THE ELIGIBILITY CRITERIA. THE SETTLEMENT ADMINISTRATORS WILL DETERMINE ELIGIBILITY AND NOTIFY GROUP MEMBERS OF THIS DETERMINATION.

4.

5.

ELIGIBLE GROUP MEMBERS WILL THEN HAVE TWO OPTIONS: (a) Option 1 – accept a “fast track resolution”, being a fixed lump sum payment of $55,000 – Group Members who accept this option will avoid the need to undergo individual assessment of their compensation entitlements, and will therefore be paid more quickly; or (b) Option 2 – proceed to individual assessment as outlined in steps 5 and 6 below – Group Members who choose this option might be entitled to more (or less) than $55,000. The assessment process will be slower and it will take longer for these Group Members to be paid their compensation. IF A GROUP MEMBER CHOOSES OPTION 2, THE GROUP MEMBER WILL BE ASKED TO PROVIDE INFORMATION TO THE SETTLEMENT ADMINISTRATORS ABOUT THEIR PERSONAL CIRCUMSTANCES, AND THE SETTLEMENT ADMINISTRATORS WILL ALSO OBTAIN MEDICAL AND OTHER DOCUMENTS RELATING TO AN ELIGIBLE GROUP MEMBER’S CLAIM. THE SETTLEMENT ADMINISTRATORS WILL PREPARE A “CLAIM BOOK”, WHICH IS A PACKAGE OF MATERIALS THAT WILL ENABLE AN ASSESSMENT OF THE AMOUNT OF COMPENSATION [page 678]

6.

PAYABLE TO THAT GROUP MEMBER, TAKING INTO ACCOUNT HER OR HIS PERSONAL CIRCUMSTANCES AND EXPERIENCES. THE CLAIM BOOK WILL BE ALLOCATED TO A LAWYER ON A PANEL OF ASSESSORS. THE PANEL OF ASSESSORS WILL CONSIST OF LAWYERS WITH SIGNIFICANT EXPERIENCE IN PERSONAL INJURY LITIGATION. THE ASSESSOR WILL BE ASKED TO MAKE A DETERMINATION REGARDING THE AMOUNT OF COMPENSATION PAYABLE

TO THAT GROUP MEMBER. 7. AT AROUND THE SAME TIME AS STEPS 4, 5 AND 6, THE PAYMENT OF LIENS FOR EACH GROUP MEMBER WILL BE DETERMINED AND RESOLVED. FOR SOME GROUP MEMBERS, THE RESPONDENTS WILL BE RESPONSIBLE FOR THE PAYMENT OF ALL OF THEIR LIENS, WHEREAS FOR OTHER GROUP MEMBERS, LIENS WILL BE PARTLY PAID BY THE RESPONDENTS AND PARTLY PAID FROM THE POOL OF SETTLEMENT FUNDS, OR ALTERNATIVELY PAID ENTIRELY FROM THE POOL OF SETTLEMENT FUNDS. THIS WILL DEPEND ON THE TYPES OF HEALTH CARE TREATMENT FOR WHICH PAYMENTS WERE MADE BY THIRD PARTIES. A GROUP MEMBER’S LIENS WILL NEED TO BE RESOLVED BEFORE THE GROUP MEMBER CAN BE PAID HIS OR HER COMPENSATION. 8. IF A GROUP MEMBER IS DISSATISFIED WITH THE INITIAL ASSESSMENT OF THEIR COMPENSATION ENTITLEMENTS, SHE OR HE CAN SEEK A REVIEW OF THE ASSESSMENT BY A MORE SENIOR LAWYER. 9. CLAIMS WILL BE EITHER PROPORTIONATELY INCREASED OR REDUCED DEPENDING ON WHETHER THERE ARE SURPLUS SETTLEMENT FUNDS OR WHETHER THE TOTAL VALUE OF ALL CLAIMS IS ANTICIPATED TO BE GREATER THAN THE AVAILABLE SETTLEMENT FUNDS. 10. THE SETTLEMENT ADMINISTRATORS MAY MAKE PAYMENTS IN SEVERAL INSTALMENTS, AND THE SETTLEMENT ADMINISTRATORS MAY ALSO MAKE PAYMENTS AT DIFFERENT TIMES IN TRANCHES TO GROUPS OF GROUP MEMBERS AS THEIR CLAIMS ARE ASSESSED AND FINALISED. OTHER THAN IN THE RESOLUTION OF LIENS, THE RESPONDENTS WILL HAVE NO ACTIVE ROLE IN ASSESSING AND DETERMINING ELIGIBILITY OF A GROUP MEMBER OR THE AMOUNT OF THEIR COMPENSATION.

How much will Group Members receive under the settlement? Unless a Group Member accepts the fast track resolution, the amount of compensation payable to any one Group Member is not yet known because each person’s claim will be individually assessed according to their personal [page 679] circumstances. A Group Member’s individual circumstances will have an impact on the assessment of compensation under various categories of loss: 1.

2. 3.

4.

GENERAL DAMAGES OR “NON-ECONOMIC LOSS”, WHICH IS COMPENSATION FOR PAIN AND SUFFERING, LOSS OF AMENITIES OF LIFE AND LOSS OF ENJOYMENT OF LIFE; COMPENSATION FOR DOMESTIC CARE AND ASSISTANCE; COMPENSATION FOR LOST INCOME OR LEAVE ENTITLEMENTS AND LOST SUPERANNUATION ENTITLEMENTS ASSOCIATED WITH LOST INCOME, AND COMPENSATION FOR LOSS OF INCOME DUE TO ANY ONGOING INCAPACITY FOR WORK; COMPENSATION FOR OUT-OF-POCKET EXPENSES SUCH AS MEDICAL OR HOSPITAL, PHARMACEUTICAL, AIDS AND EQUIPMENT, TRAVEL AND ACCOMMODATION, PHYSIOTHERAPY AND COMMERCIAL CARE EXPENSES.

For example, a Group Member who had a straightforward revision experience with little or no ongoing pain is likely to receive less than a person who suffered post-operative complications or a relatively young person whose ASR revision had an impact on their capacity to work and earn a living.

Do Group Members need to pay legal fees in order to make

a claim? No. If the settlement is approved, the Applicants’ legal costs in conducting the ASR class action (including the costs of running the trial in 2015) will be paid from the settlement sum. Group Members do not need to make a contribution to these legal costs. The settlement administrators’ costs of administering the Settlement Scheme and processing claims by Group Members will be paid from the settlement sum. Again, Group Members do not need to make a contribution to these legal costs, except that Group Members may be requested to pay the costs of a review if the review is unsuccessful.

Other important features of the proposed settlement As part of the agreement to settle the ASR class action, the Applicants and all Group Members will release and discharge certain “released parties” from all legal claims relating to the ASR hip implants. The released parties include not only DePuy and JJM but also their related companies (such as subsidiaries) as well as their insurers, Crawford & Co, employees and others involved in designing the ASR hip implants. The released parties also include doctors and hospitals involved in implanting or revising ASR hip implants. If the settlement is approved, it will [page 680] have the effect that the Applicants and Group Members promise not to sue any of the released parties, including surgeons and hospitals. If a Group Member decides to sue a third party (for example a surgeon), and the third party then makes a cross-claim against one of the Respondents or its related parties (for example, DePuy), the settlement provides that the

Group Member indemnifies DePuy in relation to that cross-claim (except that the indemnity does not cover legal costs). The reason for these provisions is to bring to an end all Australian litigation involving Group Members arising from the use of the ASR hip implants and to resolve all Group Members’ legal claims relating to the ASR hip implants by means of this proposed settlement.

• BANK FEES • National Australia Bank Ltd Bank Fees Class Action Notice of Proposed Settlement Federal Court of Australia Proceeding VID 1459 of 2011 This notice is to advise group members in the above proceeding that a settlement has been entered into on behalf of all group members with National Australia Bank Ltd (NAB). The settlement relates only to the proceeding against NAB, and does not affect group members in any of the other bank fees class action proceedings. The settlement is subject to a number of terms in a confidential settlement deed, including that: the settlement be approved by the Court; and such approval be granted prior to the High Court handing down its judgment in the related proceeding against Australia and New Zealand Banking Group Ltd (ANZ Proceeding). The terms of the settlement provide for a payment by NAB of $6.6 million, and are such that a minimum of $2.5 million will be available for distribution among group members. That amount may be higher, depending on the ultimate outcome of the ANZ Proceeding. Under the settlement, whatever amount is available for distribution among group members will be distributed:

[page 681] only to those group members who, prior to 4.00 pm on 27 January 2015, registered with IMF Bentham Ltd (IMF) to participate as a group member in this proceeding and did not opt out of the proceeding (Registered Group Members) (if you have received this notice by email, you are a Registered Group Member); and only to those Registered Group Members who have provided sufficient information to identify them as a NAB customer who held a personal credit card account with NAB during the period 16 December 2001 to 16 December 2011. If the settlement is approved by the Court, Registered Group Members who meet the above criteria will receive a distribution from the settlement sum. Further, if the settlement is approved by the Court, every group member in the proceeding (including non-registered group members) will be precluded from bringing any subsequent claims against NAB in respect of the matters which are the subject of the proceeding (namely, for repayment of certain fees (including, but not limited to, late payment fees) charged by NAB, on the ground that they are penalties at law or in equity, or were charged in breach of various statutory provisions). The application for approval of the settlement has been listed for hearing before the Federal Court in Melbourne on 6 April 2016. Any group member who wishes to be heard by the Court, either in support of, or in opposition to, the application, must on or before 1 April 2016 either file a notice of address for service in the proceeding, and serve a copy of the notice on the applicants’ solicitors, or otherwise provide written notice to the applicants’ solicitors of his or her desire to be heard. Alternatively, any group member who does object to the proposed settlement, but does not wish to be heard by the Court, may provide to the applicants’ solicitors a written notice setting out their grounds of objection – any such notice should be provided to the applicants’ solicitors at least 48 hours prior to the hearing of the application, and will be brought to the attention of the Court.

Further information in relation to the proceeding, including copies of relevant documents, can be obtained from the website of IMF (www.imf.com.au) or from the website of the applicants’ solicitors (www.mauriceblackburn.com.au).

[page 682]

REGISTRATION TO RECEIVE COMPENSATION •

[page 683]

[page 684]

[page 685]

[page 686]

[page 687]

[page 688]

• LEIGHTON HOLDINGS: OPT OUT AND SETTLEMENT NOTICE • Notice to Group Members No. NSD 2244 of 2013 Federal Court of Australia District Registry: New South Wales Division: General Inabu Pty Ltd (ACN 003 657 654) as trustee for the Alidas Superannuation Fund Applicant Leighton Holdings Limited (ACN 004 482 982)

Respondent

LEIGHTON SHAREHOLDER CLASS ACTION A. NOTICE OF PROPOSED SETTLEMENT AND OPT-OUT RIGHTS 1. On 30 October 2013, a representative proceeding or “class action” was commenced in the Federal Court of Australia against Leighton Holdings Limited (Leighton) by Inabu Pty Ltd (Applicant) on behalf of Group Members who purchased shares in Leighton between 16 August 2010 and 11 April 2011 (Inabu v Leighton Class Action). If you purchased shares in Leighton during the period 16 August 2010 to 11 April 2011 you should read this Notice carefully as it will affect your legal rights. 2. The Federal Court has ordered that this Notice be published for the information of persons who might be members of the class on whose behalf the action is brought and may be affected by the action. You have been identified as a potential Group Member. If there is anything in the Notice that you do not understand or if you have any questions, you should not contact the Federal Court and should seek independent legal advice or contact Maurice Blackburn. 3. An in-principle settlement has been reached in the Inabu v Leighton Class Action for the benefit of the Applicant and Group Members. You may be entitled to participate in the proposed settlement if you purchased shares in Leighton during the period 16 August 2010 to 11 April 2011 (Relevant Period). 4. On 15 August 2014 the Court will be asked to approve the proposed settlement of the class action. You are entitled to attend the hearing. Your options are to: a. claim compensation by participating in the settlement – see paragraphs 18 and 19; b. oppose the settlement – see paragraphs 20 and 21;

[page 689] c. d.

opt out of the proceeding – see paragraphs 22-26; or do nothing – see paragraphs 27-28.

Each of these options is explained below in paragraphs 18 to 28. If you do nothing you will lose your rights to claim compensation. Please carefully consider the information in paragraphs 27-28 if you are considering the option of doing nothing. B.

SUMMARY OF THE CLASS ACTION

5.

The Inabu v Leighton Class Action relates to Leighton’s 11 April 2011 ASX announcement of a $1.148 billion write-down and the share price decline which followed that announcement. The Inabu v Leighton Class Action alleges that during the Relevant Period Leighton failed to adequately disclose that its 2011 financial year profit forecasts were likely to be substantially impacted by difficulties with its Al-Habtoor joint venture and Brisbane Airport Link and Victorian Desalination Plant construction projects in breach of its continuous disclosure obligations under the ASX Listing Rules and Corporations Act 2001. It is also alleged that Leighton engaged in misleading or deceptive conduct in relation to those matters. (This class action does not allege the non-disclosure by Leighton of foreign corruption in its international operations which is the subject of a separate class action, unrelated to this claim.) The Inabu v Leighton Class Action alleges that as a consequence of Leighton’s conduct the trading price of Leighton shares on the ASX was artificially inflated during the Relevant Period and that persons who purchased Leighton shares during this period suffered loss and damage. It is alleged that Leighton is liable to pay damages to the Applicant and Group Members as a result of those matters. Leighton denies the allegations and is defending the claims. Full details of the allegations made by the Applicant are set out in the Statement of Claim which may be inspected on the Maurice Blackburn

6.

7.

8. 9.

website at http://www.mauriceblackburn.com.au/areas-of-practice/class-‐ actions/current-class-actions/leighton-class-action.aspx and at each District Registry of the Federal Court of Australia, and on its website. C.

PROPOSED SETTLEMENT OF THE CLASS ACTION

10. The parties to the class action have agreed on terms for the settlement of the class action. Under the terms of the proposed settlement, Leighton will pay a settlement amount of $69.45 million to the Applicant and Group Members to settle the class action inclusive of costs, estimated to be $3.9 million. Under the proposed settlement, in exchange for receiving the settlement amount, the Applicant and the Group Members will not have the ability to bring a further claim in respect of the losses alleged in the Inabu v Leighton Class Action. [page 690] 11. Group Members are those people who purchased shares in Leighton during the period from 16 August 2010 to 11 April 2011 inclusive and who have suffered a loss by reason of the matters pleaded in the Statement of Claim. 12. The compensation paid to each Group Member under the proposed settlement will depend on factors such as the number of shares purchased and sold by that Group Member during the Relevant Period, the timing of that Group Member’s purchases, the number of Group Members who participate in the settlement, the size of their holdings and the overall losses of all Group Members who participate in the settlement. Group Members’ compensation will be determined by the application of a complicated Loss Assessment Formula. 13. Under the terms of the settlement, Leighton has an option to withdraw from the settlement if the result of the opt-out process materially affects the class covered by the settlement. Conditions to the settlement becoming effective include that Leighton does not exercise this option to withdraw from the settlement and that the Court assesses that the

settlement is a fair and reasonable compromise of the claims and approves the terms of settlement. If the proposed settlement is not approved by the Court the Inabu v Leighton Class Action will continue. 14. The process by which the settlement amount is proposed to be distributed will be outlined in a Settlement Distribution Scheme. The method of calculating the amount each Group Member who participates in the settlement (if approved) will receive will be outlined in a Loss Assessment Formula document. Both of these documents must be approved by the Court and both documents may be provided to Group Members on request. A confidentiality undertaking must be signed by those Group Members wishing to see the Loss Assessment Formula document. 15. Many Group Members have previously entered into a retainer agreement with Maurice Blackburn and a funding agreement with a litigation funder, International Litigation Funding Partners Pte Ltd (ILFP). The funding agreement provides that ILFP fund the Inabu v Leighton Class Action and if the Inabu v Leighton Class Action is successfully resolved that the funded Group Members then pay commission and costs to ILFP. 16. The Loss Assessment Formula will include a funding equalisation formula, the effect of which will be to ensure that both funded and unfunded Group Members receive the same rate of return in the proposed settlement. D. WHAT GROUP MEMBERS MUST DO 17. If you consider that you are or may be a Group Member in the Inabu v Leighton Class Action you should choose one of the following options: Option A — If you wish to claim compensation from Leighton Group Members who are NOT already clients of Maurice Blackburn 18. If you wish to make a claim for any losses that you might have suffered in relation to the events described in Section A of this Notice, and you are not already a client of Maurice Blackburn in the Inabu v Leighton

Class Action, [page 691] you must by 4.00pm on 18 July 2014 complete and submit the “Group Member Registration Form” on the Maurice Blackburn website, which is accessible at https://register.mauriceblackburn.com.au/leighton, and then complete and return the required share trading documents to Maurice Blackburn by no later than 4.00pm on 1 August 2014. See Schedule A for further information regarding the Group Member Registration Process including the action you should take if you are unable to register electronically. Note: there are deadlines for completing necessary steps for claiming compensation. If you miss these deadlines you will lose your right to make a claim in this settlement. Group Members who ARE already clients of Maurice Blackburn 19. If you are a client of Maurice Blackburn in the Inabu v Leighton Class Action you should already have received a Notice of Leighton Trading Data, listing the information Maurice Blackburn holds for you. If you wish to make a claim for any losses suffered in relation to the events described in Section A of this Notice you must ensure that the share trading data listed in the Notice of Leighton Trading Data is accurate and complete and inform us by 4.00pm on 18 July 2014 if the data we hold is not accurate or complete. If you believe that you are a client of Maurice Blackburn but have not received a Notice of Leighton Trade Data you must contact Maurice Blackburn prior to 4.00pm on 18 July 2014. Option B – If you wish to oppose the settlement 20. If you do not believe the terms of the proposed settlement should be approved, you are entitled to ask the Court not to approve the settlement. If you wish to take that step you must: a. send a written notice to Maurice Blackburn (at the address below) informing them that you wish to oppose the settlement by 1

August 2014; and b. attend (or send a representative to) the hearing at 10:15am on 15 August 2014, when the Federal Court will consider whether to approve the settlement. You or your representative will need to be in a position on 15 August 2014 to explain to the Court why you consider that the settlement should not be approved. You should also be in a position to inform the Court whether you wish to participate in the settlement or whether you wish to seek the leave of the Court to opt out of the proceeding if you are not successful in opposing the settlement. 21. If you think you might wish to oppose the proposed settlement of the class action, you should obtain independent legal advice immediately. Option C – If you wish to opt out of the proceeding 22. The Applicant in a class action does not need to seek the consent of group members to commence a class action on their behalf. However, group [page 692] members can cease to be group members by opting out of the class action. Your legal rights may be affected by a decision whether or not to remain a group member. 23. If you opt out of the proceeding and the settlement is approved, you will not receive any compensation in the proposed settlement. If you opt out of the proceeding and the proposed settlement is not approved, you will not be entitled to share in the benefit of any order, judgment or subsequent settlement of the class action. 24. Commonly, group members will only opt out of a proceeding if they intend to pursue their own claim against the respondent at their own expense within the time limit applicable to their claim. 25. You should obtain independent legal advice before opting out of the claim.

26. If you wish to opt out of the proceeding you must submit an opt-out form to the Sydney registry of the Federal Court of Australia by 4.00pm 18 July 2014 otherwise it will not be effective. A copy of the opt-out form is available at Maurice Blackburn’s website at http://www.maurice‐ blackburn.com.au/areas-of-practice/class-actions/current-classactions/le‐ ighton-class-action.aspx. Option D - If you do nothing 27. If you do nothing and the settlement is approved, you will not receive compensation, you will be bound by the settlement and you will not be able to claim compensation from Leighton in the future in relation to the circumstances giving rise to the Inabu v Leighton Class Action. 28. If you do nothing and the settlement is not approved then you will remain a Group Member and the Applicant will continue to bring the proceeding on your behalf up to the point where the Court determines those questions that are common to the claims of the Applicant and the Group Members. In that case, you will be bound by the outcome of the Inabu v Leighton Class Action. If the class action is successful, you will be entitled to share in the benefit of any order, judgment or settlement in favour of the Applicant and Group Members. (In some cases you may have to satisfy certain conditions before your entitlement arises.) If the action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other proceedings. E.

LEGAL COSTS

29. You will not become liable for any legal costs by registering your claim for compensation, doing nothing or opting out. In applying for approval of the proposed settlement, the Applicant intends to ask the Court to make an order that some of the settlement amount, and interest accrued on the settlement amount, be used to pay the legal costs incurred in running the class action and in administering the settlement. 30. If the settlement is not approved Group Members will not then become liable for any legal costs simply by remaining a Group Member for the determination

[page 693] of those questions that are common to the claims of the Applicant and the Group Members however if at a later date compensation becomes payable to you the Applicant might ask the Court to make an order that some of that compensation be used to pay the legal costs incurred in the running of the class action. F.

QUESTIONS

31. Please consider the above matters carefully. If there is anything of which you are unsure regarding this Notice, you should contact Maurice Blackburn by sending an email to [email protected]. You should not delay making your decision.

SCHEDULE A INFORMATION REGARDING GROUP MEMBER REGISTRATION PROCESS To register as a Group Member and to claim compensation in the proposed settlement, please visit https://register.mauriceblackburn.com.au/leighton and complete the registration forms and accompanying documents. Registration at this site requires you to enter details of the Leighton shares that you purchased and sold during the Relevant Period, following the prompts on the screen. Within three business days of you submitting the online form, an unexecuted Statutory Declaration will be sent to you by email.

You or an authorised person must execute the Statutory Declaration before a witness who is authorised to witness Statutory Declarations and return it to Maurice Blackburn so that it is received by Maurice Blackburn by 4.00pm on 1 August 2014. You can either send a scan of the Statutory Declaration to: [email protected] or send the hard copy to: Inabu v Leighton Class Action Registration Maurice Blackburn PO Box A266 Sydney South NSW 1235 Under the terms of the Settlement Distribution Scheme Statutory Declarations may only be accepted and processed by Maurice Blackburn if they are complete and have been executed by persons with authority to sign on behalf of the Group [page 694] Member and witnessed by persons with authority to witness the signing of a Statutory Declaration. If you do not have access to a computer or are otherwise unable to register as a Group Member electronically please telephone Maurice Blackburn on +61 2 8277 2607 and ask to speak with a member of the Leighton class action team. If you execute the form below you will not receive any compensation from the Leighton v Inabu Class Action. If you do wish to receive compensation you should not sign this form, and instead you should register your claim with Maurice Blackburn by following the instructions in the Notice of Proposed Settlement.

Form 21 Rule 9.34 Opt Out notice No. NSD 2244 of 2013 Federal Court of Australia District Registry: New South Wales Division: General Inabu Pty Ltd (ACN 003 657 654) as trustee for the Alidas Superannuation Fund Applicant Leighton Holdings Limited (ACN 004 482 982) Respondent To:

The Registrar Federal Court of Australia New South Wales District Registry Level 17 Law Courts Building Queens Square, Sydney NSW 2000

I, (insert name) _______________________________________, give notice under section 33J of the Federal Court of Australia Act 1976 that, I am, or a person or entity that I represent is, a group member in the above proceeding. I or the person or entity I represent hereby opt out of the proceeding. [page 695] Dated: ___________________________________________

Signature Name Address Contact email Telephone number

Your Opt Out Notice will be effective if this page is completed and submitted by 4.00pm on 18 July 2014. You are requested to also complete the questions on page 2 to assist the parties with the management of the settlement and the opt-out process. Please answer the following questions: Question 1 Name of shareholder opting out (person or entity) Question 2 HIN (Holder Identification Number) or SRN (Security Reference Number) as applicable Question 3 Is the shareholder the registered AND beneficial holder of the shares? Question 4 If you answered ‘NO’ to question 3, is the shareholder the registered holder of the shares? Question 5 If you answered ‘NO’ to question 3, is the shareholder the beneficial holder of the shares? Question 6 Do you give consent to Allens (the solicitors for Leighton Holdings Limited) to contact the registered holder of the shares to assist in identifying the relevant shareholding?

The number I have provided is a HIN / SRN (please circle the applicable option) YES / NO If yes, go to question 6. If no, please go to question 4 YES / NO If ‘NO’, name of registered holder: YES / NO If ‘NO’, name of beneficial holder: YES / NO

[page 696]

ANNEXURE E FEDERAL COURT OF AUSTRALIA NOTICE TO GROUP MEMBERS

Leighton Shareholder Class Action Inabu Pty Ltd v Leighton Holdings Limited (NSD2244/2013) The Federal Court of Australia has ordered that this notice be published for the information of persons who might have claims affected by this class action and who may wish to participate in a proposed settlement of that action. If you acquired ordinary fully-paid shares in Leighton Holdings Ltd between 16 August 2010 to 11 April 2011 (inclusive) you may be eligible to participate in this class action and the proposed settlement. The class action relates to Leighton’s announcement on 11 April 2011 of a $1.148 billion write-down and the alleged failure by Leighton to adequately disclose that its 2011 financial year profit results were likely to be substantially impacted by difficulties with two large construction projects and a Middle East joint venture. If you wish to participate in the proposed settlement of this class action, you must complete and return a registration form and statutory declaration to Maurice Blackburn by 4.00pm on 1 August 2014. If you do not wish to be a group member, you must provide a Notice of Opting Out to the Court by 4.00pm on 18 July 2014. If you take no action by 4.00pm on 18 July 2014 you may lose any right to receive compensation or pursue separate action on the same claims. For more information, including registration and opt out forms, please visit ‐ http://www.mauriceblackburn.com.au/areas-of-practice/class-actions/curren‐ t-class-actions/leighton-class-action.aspx or call Maurice Blackburn on (02) 8277 2607. Notice to Funded Group Members [page 697]

ANNEXURE F No. NSD 2244 of 2013 Federal Court of Australia District Registry: New South Wales Division: General Inabu Pty Ltd (ACN 003 657 654) as trustee for the Alidas Superannuation Fund Applicant Leighton Holdings Limited (ACN 004 482 982) Respondent

LEIGHTON SHAREHOLDER CLASS ACTION NOTICE OF PROPOSED SETTLEMENT AND OPT-OUT RIGHTS TO FUNDED GROUP MEMBERS 1.

2.

On 30 October 2013, a representative proceeding or “class action” was commenced in the Federal Court of Australia against Leighton Holdings Limited (Leighton) by Inabu Pty Ltd (Applicant) on behalf of Group Members who purchased shares in Leighton between 16 August 2010 and 11 April 2011 (Inabu v Leighton Class Action). You should read this notice carefully as it will affect your legal rights. The Federal Court has ordered that this notice be published for the information of persons who might be members of the class on whose behalf the action is brought and may be affected by the action. You have been identified as a Group Member. If there is anything in the notice that you do not understand or you have any questions, you

3.

4.

5.

should not contact the Federal Court and should contact Maurice Blackburn or seek independent legal advice. An in-principle settlement has been reached in the Inabu v Leighton Class Action for the benefit of the Applicant and Group Members. On 15 August 2014 the Court will be asked to approve the proposed settlement of the class action. You are entitled to attend the hearing. As you have already signed a funding agreement with International Litigation Funding Partners (ILFP) in relation to this class action, you do not need to take any further action in order to participate in the proposed settlement, other than if you wish to amend the trading data that you have already provided (in which case see paragraphs 20 and 21). If you wish to oppose the proposed settlement, you must take the steps referred to in option B outlined in paragraph 22 of this notice. [page 698]

6.

If you wish to opt out of the class action, you must take the steps referred to in option C outlined in paragraphs 24 to 28 of this notice.

A. SUMMARY OF THE CLASS ACTION 7.

8.

The Inabu v Leighton Class Action relates to Leighton’s 11 April 2011 ASX announcement of a $1.148 billion write-down and the share price decline which followed that announcement. The Inabu v Leighton Class Action alleges that during the period 16 August 2010 to 11 April 2011 (Relevant Period) Leighton failed to adequately disclose that its 2011 financial year profit forecasts were likely to be substantially impacted by difficulties with its Al-Habtoor joint venture and Brisbane Airport Link and Victorian Desalination Plant construction projects in breach of its continuous disclosure obligations under the ASX Listing Rules and Corporations Act 2001. It is also alleged that Leighton engaged in misleading or deceptive conduct in relation to those matters. (This class action does not allege

the non-disclosure by Leighton of foreign corruption in its international operations which is the subject of a separate class action, unrelated to this claim.) 9. The lnabu v Leighton Class Action alleges that as a consequence of Leighton’s conduct the trading price of Leighton shares on the ASX was artificially inflated during the Relevant Period and that persons who purchased Leighton shares during this period suffered loss and damage. It is alleged that Leighton is liable to pay damages to the Applicant and Group Members as a result of those matters. 10. Leighton denies the allegations and is defending the claims. 11. Full details of the allegations made by the Applicant are set out in the Statement of Claim which may be inspected on the Maurice Blackburn website at http://www.mauriceblackburn.com.au/areas-of-practice/class-‐ actions/current-class-actions/leighton-class-action.aspx and at each District Registry of the Federal Court of Australia, and on its website. B.

PROPOSED SETTLEMENT OF THE CLASS ACTION

12. The parties to the class action have agreed on terms for the settlement of the class action. Under the terms of the proposed settlement, Leighton will pay a settlement amount of $69.45 million to the Applicant and Group Members to settle the class action inclusive of costs, estimated to be $3.9 million. Under the proposed settlement, in exchange for receiving the settlement amount, the Applicant and the Group Members will not have the ability to bring a further claim in respect of the losses alleged in the lnabu v Leighton Class Action. 13. Group Members are those people who purchased shares in Leighton during the period from 16 August 2010 to 11 April 2011 inclusive and who have suffered a loss by reason of the matters pleaded in the Statement of Claim. [page 699] 14. The compensation paid to each Group Member under the proposed

settlement will depend on factors such as the number of shares purchased and sold by that Group Member during the Relevant Period, the timing of a Group Member’s purchases, the number of Group Members who participate in the settlement, the size of their holdings and the overall losses of all Group Members who participate in the settlement. Group Members’ compensation will be determined by the application of a complicated Loss Assessment Formula. 15. Under the terms of the settlement, Leighton has an option to withdraw from the settlement if the result of the opt-out process materially affects the class covered by the settlement. Conditions to the settlement becoming effective include that Leighton does not exercise this option to withdraw from the settlement and that the Court assesses that the settlement is a fair and reasonable compromise of the claims and approves the terms of settlement. If the proposed settlement is not approved by the Court, the lnabu v Leighton Class Action will continue. 16. The process by which the settlement amount is proposed to be distributed will be outlined in a Settlement Distribution Scheme. The method of calculating the amount each Group Member who participates in the settlement (if approved) will receive will be outlined in a Loss Assessment Formula document. Both of these documents must be approved by the Court and both documents may be provided to Group Members on request. A confidentiality undertaking must be signed by those Group Members wishing to see the Loss Assessment Formula document. 17. The Loss Assessment Formula will include a funding equalisation formula, the effect of which will be to ensure that both funded and unfunded Group Members receive the same rate of return in the proposed settlement. C.

WHAT FUNDED GROUP MEMBERS MUST DO Option A — If you wish to participate

18. As you have already signed a Funding Agreement you do not need to take any active step in order to participate in the proposed settlement.

19. If you do nothing and the settlement is approved, we will proceed to calculate your entitlement to compensation in accordance with the Settlement Distribution Scheme on the basis of the data you have already provided in your Retainer Agreement and Funding Agreement. 20. A copy of the data we hold on file in relation to your claim(s) is contained in Attachment A to this notice. If there is any inaccuracy or omission in the data you must notify us by making amendments to the attached table(s) by hand and returning this information to us as soon as possible, and in any event by no later than 4pm on 18 July 2014. We may contact you in order to seek clarification of any aspect of the data we hold on file. 21. It is important that your data is accurate as we will rely on the data you have provided or amended by 4pm on 18 July 2014 in working out your entitlement to compensation. [page 700] Option B — If you wish to oppose the settlement 22. If you do not believe the terms of the proposed settlement should be approved, you are entitled to ask the Court not to approve the settlement. If you wish to take that step you must: a. send a written notice to Maurice Blackburn (at the address in section D below) informing them that you wish to oppose the settlement by 4pm on 1 August 2014; and b. attend (or send a representative to) the hearing in Sydney at 10:15am on 15 August 2014 when the Federal Court will consider whether to approve the settlement. You or your representative will need to be in a position on 15 August 2014 to explain to the Court why you consider that the settlement should not be approved. You should also be in a position to inform the Court whether you wish to participate in the settlement or whether you wish to seek the leave of the Court

to opt out of the proceeding if you are not successful in opposing the settlement. 23. If you think you might wish to oppose the proposed settlement of the class action, you should obtain independent legal advice immediately. Option C — If you wish to opt out of the proceeding 24. The Applicant in a class action does not need to seek the consent of group members to commence a class action on their behalf. However, group members can cease to be group members by opting out of the class action. Your legal rights may be affected by a decision whether or not to remain a group member. 25. If you opt out of the proceeding and the settlement is approved, you will not receive any compensation in the proposed settlement. If you opt out of the proceeding and the proposed settlement is not approved, you will not be entitled to share in the benefit of any order, judgment or subsequent settlement of the class action. 26. Commonly, group members will only opt out of a proceeding if they intend to pursue their own claim against the respondent at their own expense within the time limit applicable to their claim. 27. You should obtain independent legal advice before opting out of the claim. 28. If you wish to opt out of the proceeding you must submit an opt-out form to the Sydney registry of the Federal Court of Australia by 4pm on 18 July 2014 for your opt-out to be effective. A copy of the opt-out form is available at Maurice Blackburn’s website at http://www.mauriceblack‐ burn.com.au/areas-of-practice/class-actions/current-classactions/leighto‐ n-class-action.aspx. Option D — If you do nothing and the settlement is not approved 29. If you do nothing and the settlement is not approved then you will remain a group member and the Applicant will continue to bring the proceeding on

[page 701] your behalf up to the point where the Court determines those questions that are common to the claims of the Applicant and the group members. In that case, you will be bound by the outcome of the Inabu v Leighton Class Action. If the class action is successful, you will be entitled to share in the benefit of any order, judgment or settlement in favour of the Applicant and group members. (In some cases you may have to satisfy certain conditions before your entitlement arises.) If the action is unsuccessful or is not as successful as you might have wished, you will not be able to sue on the same claim in any other proceedings. D. QUESTIONS & CONTACT INFORMATION 30. If you have any other questions regarding this Notice, you can contact Maurice Blackburn by sending an email to [email protected]. 31. You can send any hard copy documents to Maurice Blackburn at PO Box A266 Sydney South NSW 1235.

Index References are to paragraphs

A Abuse of process entrepreneurial litigation …. 1.89 multiple class actions …. 1.50 proceedings in a second forum …. 12.7 shareholder class actions …. 1.89, 10.18 Adequacy of representation see Representative party After the event insurance …. 33.6 ALRC see Australia Law Reform Commission Alternative dispute resolution mediation …. 1.48 successful examples …. 1.49 overview …. 1.48 Amendment of group description accrual of cause of action …. 11.1, 11.2 rule in Eshelby’s case …. 11.13–11.14 addition of members …. 4.31, 4.50, 9.12, 11.3, 11.19 limitation periods, and …. 31.12 applications for amendment …. 11.2, 11.17, 31.17 respondents …. 11.17 conflicts of interest …. 2.22, 2.40, 11.6, 11.20 date of effect …. 11.3, 11.19, 31.17

exclusion of members …. 11.7, 11.9, 11.18, 32.42, 36.4, 36.8 conflicts of interest …. 2.22, 2.40, 11.6, 11.20 discontinuance, as …. 11.12 impact of amendment …. 11.7, 12.2 included in error …. 11.21 limitation periods, and …. 31.13, 31.14, 31.16 fewer than seven members …. 13.9–13.10 general power of court …. 32.40, 32.42 limitation periods, and …. 9.12, 31.10–31.14, 31.17 case law …. 31.16 litigation funding agreements …. 11.6, 11.20 matters for consideration …. 11.4–11.12 conflicts of interest …. 11.6, 11.20 impact of amendment …. 11.7, 12.2 ‘just or expedient’ …. 11.7, 12.2 prejudice …. 11.6 promotion of settlement …. 11.8–11.11, 11.22, 11.23 opt-in approach …. 4.31, 4.50, 31.10 other amendment powers, and …. 11.15–11.16, 11.19, 12.6 overview …. 11.1, 11.18 pleadings …. 9.12, 11.2, 11.3, 11.14 prejudice …. 11.6 rectifying problems with definition …. 11.24 rule in Eshelby’s case …. 11.13–11.14 settlement, promotion …. 11.8–11.11, 11.22, 11.23 statutory construction …. 11.1 Amendment of statement of claim defective statements …. 24.5, 24.18 opt-out notices, and …. 24.3, 24.17 Anshun estoppel

overview …. 4.52 proceedings in a second forum …. 12.7 representative party, and …. 2.23, 2.33 representative proceedings …. 28.10, 28.13, 28.16 earlier authorities …. 28.11 Appeals extensions of time to appeal …. 28.9, 29.4, 29.8 group description …. 29.7, 30.6 group members, by …. 29.4, 29.9, 30.3 High Court …. 1.87, 30.1–30.6 operation of provision …. 30.7 notice of appeal …. 29.5, 30.4 opt-out procedure …. 1.87, 29.6, 30.5 overview …. 1.87, 29.1 parties to appeals …. 29.3, 30.2 representative proceedings, as …. 29.2 extensions of time applications …. 28.9, 29.4, 29.8 Assessors expert evidence, and …. 1.65 Australian Competition and Consumer Commission commencement of proceedings …. 34.6, 34.7–34.8 case law …. 34.9–34.11 Australian Consumer Law see Competition and Consumer Act Australia Law Reform Commission adequacy of representation …. 20.1 advantages of class actions …. 1.10 amendment of group description …. 11.1 class action, definition …. 1.2 commencement of proceedings …. 4.3

damages …. 26.5 distribution funds …. 27.4 discontinuance …. 15.19 disability or incapacity …. 7.1 excessive distribution costs …. 14.2 group members …. 2.9 security for costs …. 33.1 individual issues …. 18.1, 18.2 limitation periods …. 31.2 non-common issues …. 17.12, 18.2 notices to members …. 25.2, 25.4, 25.17, 25.31 opt-out procedure …. 9.7, 10.13 overview …. 1.4 security for costs …. 33.1 sub-groups …. 17.12

C Case management discontinuance, and …. 15.18, 15.21 ALRC recommendations …. 15.19 non-common issues …. 17.3 unsuccessful applications …. 15.20 Federal Court …. 1.31, 1.32 docket system …. 1.31 non-common issues …. 17.1–17.3, 18.2 sample group members …. 2.24, 17.4–17.10, 17.20 sub-groups …. 17.11 overview …. 1.29, 1.30, 1.34 Supreme Court of New South Wales …. 1.33 Supreme Court of Victoria …. 1.33

Cause of action accrual of cause of action …. 3.3, 3.8 actual loss or damage …. 3.4 amendment of group description …. 11.1, 11.2, 11.13–11.14 rule in Eshelby’s case …. 11.13–11.14 commencement of legislation …. 3.2 case law …. 3.5, 3.7, 3.9, 3.10 Victoria …. 3.1, 3.6 multiple causes of action …. 3.2 New South Wales …. 3.1 overview …. 3.1, 3.2 pleadings …. 9.14, 9.15 Queensland …. 3.1 Victoria …. 3.1, 3.6 Class actions access to justice …. 1.11, 1.13, 1.14, 14.1, 14.2 advantages …. 1.10, 1.14 aggregative character …. 1.3 alternative dispute resolution …. 1.48 successful examples …. 1.49 case management see Case management cohesion to claims …. 1.3 corporate law requirements, and …. 1.13 decision to commence …. 1.15 definition …. 1.2 disadvantages …. 1.14 equity jurisdiction …. 1.9 federal government support …. 1.12 funding see Funding legislation …. 1.4

differences between regimes …. 1.90–1.95 New South Wales …. 1.6, 1.9, 1.92, 1.93, 1.94, 1.95, 15.25, 15.26 other jurisdictions …. 1.9 Queensland …. 1.7, 15.25, 15.26 Victoria …. 1.5, 1.91 Western Australia …. 1.8 need for procedure …. 1.11 objective …. 1.11, 14.1, 14.2 overview …. 1.1, 1.2, 1.30 protections and safeguards …. 1.3 purpose …. 1.10–1.13 representative character …. 1.3 substantive law …. 1.26 Class closure court’s powers …. 26.16, 32.41–32.45, 36.2–36.8 case law …. 32.66–32.67, 32.72, 36.8 examples of orders …. 32.42 registration to facilitate mediation …. 32.43–32.45, 32.72 relevant considerations …. 36.7 relevant principles …. 36.5 timing of closure …. 32.46–32.50 form of orders …. 1.68 limitation periods, and …. 31.13, 31.14, 31.16 multiple class actions …. 1.55, 32.16 opt-out notices, and …. 10.7, 10.17, 10.18, 32.42 overview …. 1.66, 1.67, 22.27, 36.2 security for costs …. 33.4, 33.26 settlement …. 1.67, 1.68, 22.27–22.28 shareholder class actions …. 10.18 Closed class see Open class

commencement of proceedings …. 1.41, 4.31, 4.50 discovery …. 1.61, 32.59 multiple class actions …. 1.52 New South Wales …. 1.94 opt-in approach …. 9.8, 9.9, 9.10, 9.12, 9.23, 9.25 opt-out procedure …. 1.27, 1.41, 10.2 notice …. 10.2, 24.4 overview …. 1.27, 1.41 pleadings …. 9.8–9.12, 9.23, 9.25 Closing the class see Class closure Commencement of proceedings see also Opt-out procedure amendment of group description …. 4.31, 4.50 claims …. 1.18, 4.7–4.13, 17.1 against all respondents …. 1.18, 4.41, 4.44, 4.49, 5.12, 5.13, 5.23 individual claims …. 4.38, 4.52 injunctive or declaratory relief …. 4.13 jurisdiction …. 4.7, 4.51 matters not disqualifying …. 4.32 meaning …. 4.8–4.11 principles …. 4.9 separate claims …. 4.38, 4.52 sufficiently common …. 4.13, 4.26, 4.27, 4.40 claims against same person …. 4.14, 4.15 conflicting authorities …. 4.15–4.19 closed class …. 1.41, 4.31, 4.50 Competition and Consumer Act …. 34.6 Australian Competition and Consumer Commission …. 34.6, 34.7–34.11 conversion by amendment …. 2.27 case law …. 2.34–2.39

individual claims …. 4.38, 4.52 jurisdiction …. 4.7, 4.51, 8.1 cross-vesting jurisdiction …. 8.2–8.5 level of cohesiveness …. 1.17 limitation periods, and …. 1.84, 2.15–2.17, 2.32, 16.9, 31.1 expired limitation periods …. 31.4, 31.5, 31.15 plaintiff, definition …. 2.18, 2.32 overview …. 1.17, 2.28, 4.32–4.33, 5.11 pleadings see Pleadings relief sought …. 1.17, 4.2 commonality, and …. 4.37 damages …. 4.35, 4.36 equitable relief …. 4.34 same or different relief …. 4.37 requirements …. 1.15, 1.16–1.19, 1.24, 4.1–4.2, 9.1, 15.16 discontinuance, and …. 15.17 non-common issues, and …. 17.15 ‘same, similar or related circumstances’ …. 1.19, 4.12, 4.20–4.22, 4.33, 17.1 case law …. 4.39, 4.41–4.43, 4.45 diversity of representations …. 4.42, 4.43 outer limits of eligibility …. 4.20, 4.39 period of time …. 4.42, 4.43 seven or more persons …. 1.18, 4.3–4.6, 4.46, 13.3 ALRC recommendations …. 4.3 case law …. 4.46–4.47 fewer than seven …. 4.46–4.47, 13.3 person, meaning …. 4.6 purpose of requirement …. 4.3 satisfying requirement …. 4.4, 4.5 several respondents …. 1.18

claims against all respondents …. 1.18, 4.41, 4.44, 4.49, 5.12, 5.13, 5.23 New South Wales …. 1.92, 1.93 ‘some or all of them’ …. 1.41, 4.31 ‘substantial common issue of law or fact’ …. 1.19, 1.56, 4.12, 4.23, 4.32–4.33, 15.16, 17.1 case law …. 4.48 common issue …. 4.24–4.28, 4.29 discontinuance, and …. 15.17 elements …. 4.23 extent of commonality …. 4.29 identification of common issue …. 4.26 substantial, meaning …. 4.30, 4.48 Common fund Australian position …. 35.12–35.13, 35.14–35.15 litigation funding fees …. 10.8, 22.35, 22.69, 25.13, 26.15, 32.31, 32.37, 32.71, 35.13, 35.14–35.15 operation of orders …. 32.39 United States …. 32.38 overview …. 35.10, 35.11 United States …. 32.38, 35.10, 35.11 Common questions see also Individual issues; Non-common issues extent of commonality …. 4.29 formalising answers as orders …. 28.6, 28.7 hypothetical questions, and …. 4.25 identification …. 1.56, 4.26 general power of court …. 32.11–32.12, 32.70 individual circumstances, and …. 4.25 judgment, and …. 28.6, 28.7, 28.13, 28.29–28.30 overview …. 4.24, 4.25, 9.17, 28.7 pleadings …. 4.28, 9.16, 9.17–9.21

clear articulation …. 9.19, 9.20 hypothetical inquiry, and …. 9.21 practice note …. 9.18 trial …. 1.69–1.72 remaining issues …. 1.73 Competition and Consumer Act commencement of proceedings …. 34.6 Australian Competition and Consumer Commission …. 34.6, 34.7–34.11 court orders …. 33.14, 34.4, 34.5 parties to proceedings …. 34.1 grant of relief …. 34.2, 34.3 Concurrent class actions see Multiple class actions Conflicts of interest amendment of group description …. 2.22, 2.40, 11.6, 11.20 representative party …. 2.22, 2.40, 20.5 settlement approval …. 22.3, 22.63 Consent body corporate for a public purpose …. 6.6 representative parties …. 6.7, 6.12 judges …. 6.8 officers of the Commonwealth …. 6.5, 6.13 opt-out procedure, and …. 1.40, 6.1, 6.4, 6.10, 6.11, 10.2 overview …. 6.1 provision of consent …. 6.3 representative parties, and …. 6.7, 6.12 requirement for consent …. 6.1–6.2, 6.3, 6.11 timing of consent …. 6.9 Consolidation

multiple class actions …. 1.51 Corporations law class actions, and …. 1.13 continuous disclosure obligations …. 1.88 entrepreneurial litigation …. 1.88 Costs see also Excessive distribution costs categories of costs …. 1.28 Calderbank letters …. 18.9, 18.10 discontinuance, and …. 15.6, 15.7, 15.37 joining of group members …. 16.7–16.8 court’s power …. 32.19, 32.25, 32.58 assessment …. 32.22 costs consultants …. 32.21, 32.24 justification of quantum …. 32.25 litigation funding …. 26.15, 26.18, 32.31–32.34 proportionality …. 32.26, 32.27 rationale for surveillance …. 32.20 types of information …. 32.23 group members, and …. 1.38, 1.86, 2.8, 2.13, 18.6, 33.1, 33.2, 35.2 disclosure of costs …. 35.2 opt-out notices …. 35.3, 35.18 sample group members …. 33.10–33.11 subsequent proceedings …. 16.7–16.8 individual issues …. 18.6 Calderbank letters …. 18.9, 18.10 notice of liability …. 18.7, 18.8 offers of compromise …. 18.9, 18.10 litigation funding …. 26.15, 26.18, 32.31–32.34, 35.2 common fund orders …. 22.35, 22.69, 26.15 disclosure of costs …. 35.2

opt-out notice …. 25.12 offers of compromise …. 18.9, 18.10 opt-out notice …. 18.7, 18.8, 25.11, 25.14, 35.3, 35.18 common funds …. 25.13 litigation funding …. 25.12 misleading impressions …. 25.15 overview …. 1.28, 2.26, 25.11 regulation of costs …. 32.58 representative party …. 1.28, 1.86, 35.1, 35.14, 35.24 common fund approach …. 35.10–35.13, 35.14–35.15 ‘free rider’ effect …. 35.4–35.8, 35.16–35.17 funding commissions …. 35.26 indemnity costs …. 35.9, 35.21–35.23 opt-out notices …. 35.3, 35.18 other costs provisions, and …. 35.2, 35.3 purpose of provision …. 35.1, 35.24–35.25 replacement representative …. 20.15–20.16, 20.21 settlement, and …. 22.22–22.23, 35.4–35.8, 35.16–35.17, 35.19–35.20 sub-groups …. 17.13, 17.14, 17.20 security for costs see Security for costs settlement approval …. 1.76, 22.19, 22.20–22.21, 22.67 sub-groups …. 17.13, 17.20 representative party …. 17.13, 17.14, 17.20 Court orders amendment of group definition …. 32.40, 32.42 ‘any order’ …. 32.3 ‘appropriate or necessary’ …. 32.8 breadth of power …. 32.4–32.6, 32.8 class closure …. 26.16, 32.41–32.45, 36.2–36.8

case law …. 32.66–32.67, 32.72, 36.8 examples of orders …. 32.42 registration to facilitate mediation …. 32.43–32.45, 32.72 relevant considerations …. 36.7 relevant principles …. 36.5 security for costs …. 33.4, 33.26 timing of closure …. 32.46–32.50 common issues …. 32.11–32.12, 32.70 Competition and Consumer Act …. 33.14, 34.4, 34.5 costs …. 32.19, 32.25, 32.58 assessment …. 32.22 costs consultants …. 32.21, 32.24 justification of quantum …. 32.25 litigation funding …. 26.15, 26.18, 32.31–32.34 proportionality …. 32.26, 32.27 rationale for surveillance …. 32.20 types of information …. 32.23 date for taking steps …. 36.1 class closure orders …. 36.2–36.8 decisions or admissions of liability …. 37.1, 37.2 discovery …. 32.59 other group members …. 32.59–32.60 hybrid proceedings …. 32.61 invoking the provision …. 32.2 ‘justice is done’ …. 32.8, 37.1 limits to power …. 32.7, 32.8 litigation funding …. 26.15, 26.18, 32.31–32.34, 32.35, 32.71 common fund orders …. 22.35, 22.69, 26.15, 32.31, 32.37–32.38, 32.39, 32.71 equalisation orders …. 32.36, 32.39 funding commissions …. 32.33, 32.36, 32.39

funding fees …. 32.31, 32.32, 32.34, 32.37–32.38, 32.39 multiple proceedings …. 32.14–32.17, 32.62 ‘necessary’ …. 32.8 opt-out procedure …. 32.51 reinstatement of members …. 10.10, 10.11, 32.55–32.56, 32.64 overview …. 1.85, 32.1 plenary power, as …. 32.7, 32.8 range of circumstances …. 32.10 ‘reasonably adapted’ test …. 32.9 respondent’s communication with group members …. 32.52–32.53 case law …. 32.63–32.65 security for costs …. 32.57, 33.4, 33.26 separate questions …. 32.13 settlement …. 32.18 execution of agreement …. 32.54 statutory construction …. 32.8, 32.9 statutory test …. 32.8, 32.9 stay on claims …. 32.62 case law …. 32.68–32.69 use of general power …. 32.10 Court’s powers class closure …. 26.16 damages see Damages general power to make orders see Court orders group description see Amendment of group description group membership …. 12.1 abuse of process …. 12.7 considerations …. 12.3 interaction of provisions …. 12.6

‘just or expedient’ …. 12.2–12.5 proceedings in a second forum …. 12.7 settlement, and …. 12.4, 12.5, 12.8 judgment …. 1.81, 26.1–26.2, 26.10 negative declaratory orders …. 26.24–26.25 other orders …. 26.15, 26.16, 26.18 separate questions …. 26.17 reinstatement of group members …. 10.10, 10.11, 32.55–32.56, 32.64 saving of rights and powers …. 33.1 other jurisdictions …. 33.16 operation of provision …. 33.17, 33.18 representative procedures …. 33.12–33.15 security for costs …. 33.1–33.5, 33.19, 33.21–33.26, 33.29 separate questions …. 26.17, 32.13 Cross claims definition …. 21.1 overview …. 21.1–21.2 stay of execution …. 21.2 Cy-près remedy ‘cy-près’ type awards …. 26.11 excessive distribution costs, and …. 14.9 overview …. 14.9, 14.10, 26.8 reform attempts …. 14.9, 26.12 United States …. 26.9

D Damages aggregate assessments …. 26.4, 26.5 ALRC recommendations …. 26.5 ‘appropriate’ …. 26.5

case law …. 26.19–26.20 assessment …. 26.6, 26.7, 26.21–26.23 commencement of proceedings …. 4.35, 4.36 ‘cy-près’ type awards …. 26.11 distribution funds …. 27.1, 27.6 appropriateness …. 27.4 breadth of discretion …. 27.5 date for claims …. 27.3 orders of court …. 27.2 excessive distribution costs …. 14.1, 14.4, 15.21 ALRC recommendations …. 14.2 alternative orders …. 14.11 cy-près remedy, and …. 14.9, 26.10 de minimis non curat lex …. 14.4 effect of orders …. 14.8 onus …. 14.5 requirements …. 14.6, 14.7, 14.12 Victorian Law Reform Commission …. 14.3, 14.9 exemplary damages …. 26.13–26.14 individual assessment …. 4.36 lump sum damages …. 26.4 overview …. 26.4 powers of court …. 26.3, 26.4, 26.10 exemplary damages …. 26.13–26.14 ‘reasonably accurate assessment’ …. 26.4, 26.6, 26.7, 26.21–26.23 reimbursements to representative party see Representative party Declaratory orders powers of court …. 26.24–26.25 Declassing orders see Discontinuance Definitions see also Words and phrases

class action …. 1.2 cross claim …. 21.1 handicapped person …. 7.3 judgment …. 28.4 mentally disabled person …. 7.2 minor …. 7.2 person under a legal incapacity …. 7.2, 7.4, 7.6 person under disability …. 7.2, 7.4 plaintiff …. 2.18, 2.32 proceeding …. 2.2, 28.9 representative party …. 2.4 representative proceeding …. 2.1, 2.3, 28.9, 29.4, 29.8 settlement …. 22.6, 23.2 standing …. 5.2 Disability or incapacity ALRC recommendations …. 7.1 definitions …. 7.2–7.6 litigation representatives …. 7.1, 7.7 active steps requiring …. 7.7, 7.9 case law …. 7.9, 7.11, 7.12 overview …. 7.1 person under a legal incapacity …. 7.5 definition …. 7.2, 7.4, 7.6 purpose of provision …. 7.1 settlements …. 7.8 approval procedure …. 7.8, 7.10, 7.12 Discontinuance adequacy of representation …. 1.95, 2.5, 15.25, 20.14, 20.17 approval by court …. 2.1, 22.1, 22.7, 22.29 case management, and …. 15.18, 15.21

ALRC recommendations …. 15.19 non-common issues …. 17.3 unsuccessful applications …. 15.20 commencement of proceedings, and …. 15.16 requirements …. 15.16, 15.17 consequences …. 1.47, 15.21, 16.1–16.6 joining of group members …. 15.34–15.36, 16.2, 16.6, 16.7–16.8, 16.11 limitation periods …. 16.9 repleading of individual claims …. 16.10 unsuccessful applications …. 15.20 costs …. 15.6, 15.7, 15.37 joining of group members …. 16.7–16.8 court’s considerations …. 1.43, 15.3 court’s discretion …. 15.15 efficiency and effectiveness of proceedings …. 15.10–15.11 timing …. 15.12 excessive distribution costs …. 14.8, 14.11, 14.12, 15.21 fewer than seven members …. 13.1, 13.2, 15.21 after commencement …. 13.3, 13.10–13.11 amendment of group description …. 13.9–13.10 demonstrating or rebutting …. 13.4–13.5 effect of order …. 13.7 relevant factors …. 13.6 individual circumstances and common issues …. 1.44, 1.45, 15.22 case law …. 15.28–15.29, 15.32–15.33 timing of applications …. 15.24 individual claims …. 1.46, 15.5, 15.7, 22.7 interests of all parties …. 15.5 interests of justice …. 1.43, 1.46, 15.4, 15.15 costs …. 15.6, 15.7

efficiency and effectiveness …. 15.10–15.12 ‘otherwise inappropriate’ …. 15.13–15.14, 15.25, 15.26, 15.30–15.31 public interest, and …. 15.5 relief by other means …. 15.8–15.9 key aspects …. 15.1 limitation periods, and …. 31.8, 31.9, 31.18, 31.19 multi-applicant proceedings …. 15.34–15.36, 16.2 multiple proceedings …. 15.5 non-common issues …. 17.3 sub-groups …. 17.16 ‘otherwise inappropriate’ …. 15.13, 15.14 case law …. 15.30–15.31 New South Wales …. 15.25, 15.26 practical disincentives …. 15.14 Queensland …. 15.25, 15.26 timing …. 15.14 overview …. 1.43, 13.1, 15.1 purpose of provision …. 15.2, 15.3 reconstitution of proceedings …. 15.27 multi-applicant proceedings …. 15.34–15.36, 16.2 relief by other means …. 15.8–15.9 statistics …. 22.5 sub-groups …. 17.16 timing of applications …. 15.23–15.24, 15.38 two-step process …. 1.43 Discovery closed class …. 1.61, 32.59 group members …. 1.61, 32.59–32.60 overview …. 1.60, 1.61, 32.59 Dismissal of proceedings

want of prosecution …. 24.5, 24.18 Distribution of damages see also Excessive distribution costs; Settlement distribution constitution of fund …. 27.1, 27.6 appropriateness …. 27.4 breadth of discretion …. 27.5 date for claims …. 27.3 orders of court …. 27.2

E Entrepreneurial litigation abuse of process …. 1.89 overview …. 1.88 permanent stays …. 1.88, 1.89 Equity representative actions …. 1.9, 2.31 Estoppel Anshun estoppel see Anshun estoppel judgment requirements, as …. 1.83, 28.10, 28.16 representative proceedings …. 28.10, 28.13, 28.16 earlier authorities …. 28.11, 28.12, 28.17–28.28 Excessive distribution costs ALRC recommendations …. 14.2 alternative orders …. 14.11 cy-près remedy, and …. 14.9, 26.10 de minimis non curat lex …. 14.4 effect of orders …. 14.8 onus of respondent …. 14.5 overview …. 14.1, 14.4, 15.21 requirements …. 14.6, 14.7, 14.12

Victorian Law Reform Commission …. 14.3, 14.9 Expert evidence assessors …. 1.65 concurrent expert evidence …. 1.64 conferences or conclaves …. 1.63 overview …. 1.62

F Fiduciary relationships representative party, and …. 2.21, 2.23 Funding see also Common fund; Costs; Litigation funding overview …. 1.28 respondents, and …. 1.37

G Group members see also Amendment of group description appeals, by …. 29.4, 29.9, 30.3 binding effect of judgment …. 2.12, 28.3, 28.10, 28.15 Anshun estoppel, and …. 28.10, 28.11, 28.13, 28.16 common questions …. 28.6, 28.7, 28.13, 28.29–28.30 estoppel, and …. 28.10–28.13, 28.16–28.28 identification of members …. 1.82, 28.8, 28.14 judgment, meaning …. 28.4, 28.5, 28.6 res judicata, and …. 28.10–28.13, 28.16–28.28 closed class see Closed class communication with respondents …. 32.52–32.53 case law …. 32.63–32.65 consent see Consent costs, and …. 1.38, 1.86, 2.8, 2.13, 18.6, 33.1, 33.2, 35.2 disclosure of costs …. 35.2

opt-out notices …. 35.3, 35.18 sample group members …. 33.10–33.11 subsequent proceedings …. 16.7–16.8 court powers to include or exclude …. 12.1 abuse of process …. 12.7 considerations …. 12.3 interaction of provisions …. 12.6 ‘just or expedient’ …. 12.2–12.5 proceedings in a second forum …. 12.7 settlement, and …. 12.4, 12.5, 12.8 date for taking steps …. 36.1 class closure orders …. 36.2–36.8 disability or incapacity see Disability or incapacity discovery …. 1.61, 32.59–32.60 identification or description …. 1.66, 28.8 appeals …. 29.7, 30.6 effect of non-compliance …. 28.14 judgment, and …. 1.82, 28.8, 28.14 pleadings …. 9.4–9.6 individual claims see Individual claims limitation periods, and …. 2.15–2.17, 2.32 plaintiff, definition …. 2.18, 2.32 open class see Open class opting out see Opt-out procedure overview …. 1.27, 2.7 parties to proceedings, and …. 2.10, 2.12, 2.14, 2.30, 28.2, 34.3 ALRC recommendation …. 2.9 Competition and Consumer Act …. 34.1, 34.2, 34.3 costs …. 2.13 deeming provision …. 34.1, 34.3 plaintiff, distinction …. 2.11, 2.12, 2.29

protections and safeguards …. 1.3 representative party, and …. 1.21, 2.28 distinction …. 2.11, 2.12, 2.29 relationship …. 2.19–2.23 replacement …. 1.23 role …. 2.8 sample group members …. 33.10–33.11 security for costs …. 33.1, 33.2–33.4 case law …. 33.19–33.29 class closure orders …. 33.4, 33.26 court’s considerations …. 33.2, 33.5 effect of provisions …. 33.3 New South Wales …. 33.9, 33.20 Queensland …. 33.9 saving of rights and powers …. 33.1–33.5, 33.19, 33.21–33.26, 33.29 Victoria …. 33.7–33.8, 33.27–33.29 status …. 2.8, 2.10–2.18, 2.29, 28.2 ALRC recommendation …. 2.9

H High Court appeals …. 1.87, 30.1–30.6 operation of provision …. 30.7 Hybrid proceedings …. 32.61

I Incapacity see Disability or incapacity Individual claims discontinuance …. 1.46, 15.5, 15.7, 22.7 overview …. 4.38, 4.52

representative party …. 1.77, 23.1 applications for leave …. 23.2–23.4 conditional substitution applications …. 23.9, 23.11 notice to group members …. 23.6, 24.6 purpose of provision …. 23.1 standing …. 23.10 substitution …. 23.7–23.8, 23.9, 23.11, 23.12 withdrawal as representative party …. 23.5, 23.6, 23.7, 23.8, 23.11, 23.12, 24.6 settlement …. 22.7 representative party …. 1.77, 23.1–23.12 Individual issues see also Non-common issues ALRC recommendations …. 18.1, 18.2 case law …. 18.11–18.14 costs …. 18.6 Calderbank letters …. 18.9, 18.10 notice of liability …. 18.7, 18.8 offers of compromise …. 18.9, 18.10 further proceedings …. 19.1–19.2 alternative path to discontinuance …. 19.6 case law …. 19.7 nature of proceedings …. 19.3–19.5 interaction of provisions …. 18.3, 18.4 overview …. 18.1–18.2, 18.5, 19.1–19.2

J Joint trials overlapping proceedings …. 1.53, 1.55, 32.16 Judges consent to be group member …. 6.8

Judgment appeals see Appeals binding effect …. 1.82, 2.12, 28.3, 28.4, 28.5, 28.10, 28.15 Anshun estoppel, and …. 28.10, 28.11, 28.13, 28.16 common questions …. 28.6, 28.7, 28.13, 28.29–28.30 estoppel, and …. 28.10–28.13, 28.16–28.28 identification of members …. 1.82, 28.8, 28.14 res judicata, and …. 28.10–28.13, 28.16–28.28 common questions …. 28.6, 28.13, 28.29–28.30 formalising answers as orders …. 28.6, 28.7 damages see Damages definition …. 28.4 identification of members …. 1.82, 28.8 effect of non-compliance …. 28.14 meaning …. 28.4, 28.5 overview …. 1.82, 28.4, 28.5 powers of the court …. 1.81, 26.1–26.2, 26.10 negative declaratory orders …. 26.24–26.25 other orders …. 26.15, 26.16, 26.18 separate questions …. 26.17 representative proceedings, meaning …. 28.9, 29.4, 29.8 statutory estoppel, as …. 1.83, 28.10, 28.16 Jurisdiction claims …. 4.7, 4.51 cross-vesting scheme …. 8.2 commencement of proceedings …. 8.3–8.5 equity …. 1.9, 2.31 Federal Court …. 8.1, 8.1, 8.4 cross-vesting scheme …. 8.2–8.5

L

Legal incapacity see Disability or incapacity Legislation see also Cause of action differences between regimes …. 1.90–1.95 New South Wales …. 1.6, 1.9, 1.92 closed class …. 1.94 discontinuance …. 1.95, 15.25, 15.26 several respondents …. 1.92, 1.93 other jurisdictions …. 1.9 overview …. 1.4 Queensland …. 1.7, 15.25, 15.26 Victoria …. 1.5, 1.91 transitional provisions …. 38.1 Western Australia …. 1.8 Limitation periods ALRC recommendations …. 31.2 amendments to group …. 9.12, 31.10–31.14, 31.17 addition of members …. 31.12 class closure …. 31.13, 31.14, 31.16 date of effect …. 31.17 opening closed class …. 31.10 applicable limitation periods …. 31.3 different jurisdictions …. 31.3 commencement of proceedings, and …. 1.84, 2.15–2.17, 2.32, 16.9, 31.1 expired limitation periods …. 31.4, 31.5, 31.15 plaintiff, definition …. 2.18, 2.32 determination of member’s claim …. 31.6–31.8 discontinuance …. 31.8, 31.9, 31.18, 31.19 expired limitation periods …. 31.4, 31.5, 31.15 opt-out procedure, and …. 10.12 overview …. 1.84, 31.1, 31.20

purpose of provision …. 31.2 Liquidators role of representative party, and …. 5.6, 5.22 Litigation committees multiple class actions …. 1.53, 32.14 Litigation funding amendment of group description …. 11.6, 11.20 common fund orders …. 10.8, 22.35, 22.69, 25.13, 26.15, 32.31, 32.37, 32.71, 35.13, 35.14–35.15 operation of orders …. 32.39 United States …. 32.38 costs …. 26.15, 26.18, 32.31–32.34, 35.2 common fund orders …. 22.35, 22.69, 26.15 disclosure of costs …. 35.2 opt-out notice …. 25.12 court’s power …. 26.15, 26.18, 32.31–32.34, 32.35–32.39, 32.71 equalisation orders …. 32.36 operation of orders …. 32.39 funding commissions …. 26.15, 26.18, 32.33, 32.36, 32.39, 35.26 funding fees …. 22.35, 22.69, 32.31, 32.32, 32.34, 32.37–32.38, 32.39, 32.71 opt-out notices, and …. 10.8, 24.4, 25.12 overview …. 1.28, 32.35 representative party, and …. 2.6 respondents, and …. 1.37 security for costs, and …. 1.39 settlement, and …. 1.76, 22.24 common fund orders …. 22.35, 22.69, 26.15 funding commissions …. 26.15, 26.18

M Mediation overview …. 1.48 successful examples …. 1.49 Members see Group members Minors see Disability or incapacity Multiple class actions abuse of process …. 1.50 class closure …. 1.55, 32.16 closed class …. 1.52 consolidation …. 1.51 court’s approaches …. 1.53–1.55, 32.14–32.17, 32.62 joint trials …. 1.53, 1.55, 32.16 litigation committees …. 1.53, 32.14 opt-out procedure …. 1.54, 32.15 overview …. 1.51, 32.14 vexatious proceedings …. 1.50, 1.51 Consolidation multiple class actions …. 1.51

N Non-common issues see Individual issues ALRC recommendations …. 17.12, 18.2 case management …. 17.1–17.3, 18.2 sample group members …. 2.24, 17.4–17.10, 17.20 sub-groups …. 17.11 commencement of proceedings, and …. 17.15 discontinuance …. 17.3, 17.16 further proceedings …. 19.1–19.2

alternative path to discontinuance …. 19.6 case law …. 19.7 nature of proceedings …. 19.3–19.5 sub-groups …. 19.3 interaction of provisions …. 18.3, 18.4 overview …. 1.73, 17.1, 17.2, 17.21, 17.22, 19.1–19.2 sub-groups …. 1.73, 17.2, 17.11, 19.3 ALRC recommendations …. 17.12 case law …. 17.17–17.19 costs …. 17.13, 17.14, 17.20 discontinuance, and …. 17.16 representative party …. 17.13, 17.14, 17.20 Notice ALRC recommendations …. 25.2, 25.4, 25.17, 25.31 content of notice …. 22.10, 25.25 costs …. 18.7, 18.8, 25.11, 25.14 common funds …. 25.13 litigation funding …. 25.12 misleading impressions …. 25.15 costs of notice …. 25.18, 25.21 personal notice …. 25.18, 25.21–25.24, 25.28 court’s power …. 1.80 deficiencies in notice …. 24.5, 24.12–24.13, 24.19–24.20 dismissal of proceedings …. 24.5, 24.18 dispensing with requirements …. 24.7–24.8 opt-out notices …. 10.15, 24.4, 32.51 settlement approval notices …. 24.9–24.11, 24.15, 24.16, 24.21 failure to receive or respond …. 25.2, 25.26–25.27 form and content …. 25.3, 25.29, 25.36 approval by court …. 25.3–25.5

content of notice …. 22.10, 25.25 costs …. 25.11–25.15 opt-out notices …. 10.4, 10.5, 25.5, 25.6, 25.7, 25.32, 25.33 requirements …. 25.36 individual claims of representative party …. 23.6, 24.6 method of notice …. 25.2, 25.17, 25.19 personal notice …. 25.21–25.24, 25.28, 25.30–25.31 practice note guidance …. 25.17 social media …. 25.20 opt-out notices …. 10.3, 25.5, 25.34 amendment of statement of claim, and …. 24.3, 24.17 class closure, and …. 10.7, 10.17, 10.18 closed class …. 10.2, 24.4 costs …. 18.7, 18.8, 25.11–25.15 costs of publishing …. 25.18 dispensing with requirement …. 10.15, 24.4, 32.51 form and content …. 10.4, 10.5, 25.5, 25.6, 25.7, 25.32, 25.33 identification of members …. 25.35 litigation funding, and …. 10.8, 24.4, 25.12 method of notice …. 25.20 practice note guidance …. 10.3, 10.4 purpose of notice …. 24.2 sample notice …. 10.6 timing of notice …. 10.4, 10.16, 25.7–25.9 other matters …. 24.14 conduct of proceedings …. 24.14 deficiencies in notice …. 24.12–24.13 overview …. 1.80, 24.1, 25.1 personal notice …. 25.21, 25.22 case law …. 25.28, 25.30–25.31 costs of notice …. 25.18, 25.21–25.24, 25.28

language barriers …. 25.24 purpose of provisions …. 24.1, 25.2 settlement approval notices …. 1.74, 22.9, 24.9 content of notice …. 22.10, 25.29 deficiencies in notice …. 24.19–24.20 dispensing with requirement …. 24.9–24.11, 24.15, 24.16, 24.21 form of notice …. 25.29 individual claims of representative party …. 23.6, 24.6 specifications by court …. 25.16–25.17 costs of notice …. 25.18 method of notice …. 25.17 timing of notice …. 25.7–25.10

O Open class multiple class actions …. 1.55 overview …. 1.27 pleadings …. 9.7–9.12 Opt-out procedure ALRC recommendations …. 9.7, 10.13 appeals, and …. 1.87, 29.6, 30.5 class closure, and …. 10.7, 10.17, 10.18, 32.42 closed class …. 1.27, 1.41, 10.2, 24.4 consent, and …. 1.40, 6.1, 6.4, 6.10, 6.11, 10.2 costs …. 18.7, 18.8, 25.11, 25.14, 35.3, 35.18 common funds …. 25.13 litigation funding …. 25.12 misleading impressions …. 25.15 date fixed by court …. 10.1, 10.4, 10.14 considerations …. 10.14

extensions of time …. 10.9 form and content …. 10.4, 10.5, 25.5, 25.7, 25.32, 25.33, 25.33 costs …. 25.11–25.15 practice note guidance …. 25.6 importance of mechanism …. 10.2, 10.15 limitation periods …. 10.12 multiple class actions …. 1.54, 32.15 opt-in approach, and …. 1.40, 9.7, 9.8, 9.9, 9.10, 9.23, 9.25, 10.1 opt-out notices …. 10.3, 25.5, 25.34 amendment of statement of claim, and …. 24.3, 24.17 class closure, and …. 10.7, 10.17, 10.18 closed class …. 10.2, 24.4 costs …. 18.7, 18.8, 25.11–25.15 costs of publishing …. 25.18 dispensing with requirement …. 10.15, 24.4, 32.51 form and content …. 10.4, 10.5, 25.5, 25.6, 25.7, 25.32, 25.33 identification of members …. 25.35 litigation funding, and …. 10.8, 24.4, 25.12 method of notice …. 25.20 practice note guidance …. 10.3, 10.4 purpose of notices …. 24.2 sample notice …. 10.6 timing of notice …. 10.4, 10.16, 25.7–25.9 overview …. 1.40, 2.11, 6.4, 6.10, 9.7, 9.8, 9.11, 10.1, 10.13, 24.2 reinstatement following …. 10.10 courts’ general power …. 10.10, 10.11, 32.55–32.56, 32.64 Victoria …. 10.10 right to opt out …. 1.27, 10.1 Orders see Court orders Originating process see Pleadings

P Parties to proceedings see also Representative party appeals …. 29.3, 30.2 group members, and …. 2.10, 2.12, 2.14, 2.30, 28.2, 34.3 ALRC recommendation …. 2.9 Competition and Consumer Act …. 34.1, 34.2, 34.3 costs …. 2.13 deeming provision …. 34.1, 34.3 overview …. 28.1 Pleadings cause of action …. 9.14, 9.15 claims, specification …. 9.13, 9.15, 9.16 common questions …. 4.28, 9.16, 9.17–9.21 clear articulation …. 9.19, 9.20 hypothetical inquiry, and …. 9.21 practice note …. 9.18 degree of generality …. 9.14–9.15 group description …. 9.4–9.6, 9.24 adequacy …. 9.6, 9.22 amendment of description …. 9.12, 11.2, 11.3, 11.14 case law …. 9.22–9.25 importance of requirement …. 9.4 open or closed class …. 9.7–9.12, 9.23, 9.25 requirements …. 9.6 variations …. 9.5 open or closed class …. 9.7–9.12 amendment of group definition …. 9.12 opt-in approach …. 9.8, 9.9, 9.10, 9.12, 9.23, 9.25 overview …. 1.25, 9.1 practice notes …. 9.2, 9.3

relief, specification …. 9.13 requirements …. 1.24–1.25, 1.26, 9.2, 9.3 role of pleadings …. 9.13 trial, and …. 9.16, 9.20 Proceedings conversion by amendment …. 2.27 case law …. 2.34–2.39 definition …. 2.2, 28.9 overview …. 2.3 representative proceedings, distinction …. 2.2, 2.3, 2.31, 2.41

R Remaining issues see Non-common issues Representative party adequacy of representation …. 2.5, 2.25, 2.41, 20.1, 20.6, 20.7 alignment of interests …. 20.6 ALRC recommendation …. 20.1 application by group member …. 20.12, 20.14, 20.19 application of provision …. 20.2–20.3 case law …. 20.18–20.21 conflicts of interest …. 20.5 discontinuance …. 1.95, 2.5, 15.25, 20.14, 20.17 ill-health …. 20.4, 20.21 loss of confidence …. 20.4 safeguards for members …. 20.9–20.13 substitution …. 1.23, 2.5, 2.41, 5.17, 20.1, 20.2, 20.3, 20.8, 20.14, 20.15–20.16, 20.18, 20.19, 20.21 Anshun estoppel, and …. 2.23, 2.33 ceasing to have claim …. 5.18 conflicts of interest …. 2.22, 2.40, 20.5

consent, and …. 6.7, 6.12 costs …. 1.28, 1.86, 35.1, 35.14, 35.24 common fund approach …. 35.10–35.13, 35.14–35.15 ‘free rider’ effect …. 35.4–35.8, 35.16–35.17 funding commissions …. 35.26 indemnity costs …. 35.9, 35.21–35.23 opt-out notices …. 35.3, 35.18 other costs provisions, and …. 35.2, 35.3 purpose of provision …. 35.1, 35.24–35.25 replacement representative …. 20.15–20.16, 20.21 settlement, and …. 22.22–22.23, 35.4–35.8, 35.16–35.17, 35.19–35.20 sub-groups …. 17.13, 17.14, 17.20 definition …. 2.4 discovery …. 1.60, 32.59 fiduciary obligations …. 2.21, 2.23 functions …. 1.22, 2.6 group members, and …. 1.21, 1.23, 2.28 distinction …. 2.11, 2.12, 2.29 relationship …. 2.19–2.23 litigation funding, and …. 2.6 overview …. 1.20–1.23, 2.4, 2.20 powers and responsibilities …. 2.4, 2.5, 2.6 liquidators, and …. 5.6, 5.22 settlement of individual claims …. 1.77, 23.1 applications for leave …. 23.2–23.4 conditional substitution applications …. 23.9, 23.11 notice to group members …. 23.6, 24.6 purpose of provision …. 23.1 standing, and …. 23.10 substitution …. 23.7–23.8, 23.9, 23.11, 23.12

withdrawal as representative party …. 23.5, 23.6, 23.7, 23.8, 23.11, 23.12, 24.6 ‘some or all of them’ …. 4.31 standing see Standing sub-groups …. 17.13, 17.14, 17.20 substitution …. 1.23, 2.5, 2.41, 5.17, 20.1, 20.18 ALRC recommendation …. 20.1 application by group member …. 20.12, 20.14, 20.19 application of provision …. 20.2–20.3 case law …. 20.18, 20.19, 20.21 costs incurred prior to …. 20.15–20.16, 20.21 effect of orders …. 20.8 settlement of individual claims …. 23.7–23.8, 23.9, 23.11, 23.12 withdrawal …. 23.5, 23.7, 23.8, 23.11, 23.12 notice to group members …. 23.6, 24.6 Representative proceedings Anshun estoppel …. 28.10, 28.13, 28.16 earlier authorities …. 28.11 appeals see Appeals commencement see Commencement of proceedings conversion by amendment …. 2.27 case law …. 2.34–2.39 cross claims …. 21.1–21.2 definition …. 2.1, 2.3, 28.9, 29.4, 29.8 discontinuance see Discontinuance estoppel …. 28.10, 28.13, 28.16 earlier authorities …. 28.11, 28.12, 28.17–28.28 fewer than seven members …. 13.1, 13.2, 15.21 amendment of group description …. 13.9–13.10 decline after commencement …. 13.3, 13.10–13.11

demonstrating or rebutting …. 13.4–13.5 discontinuance, relevant factors …. 13.6 effect of order …. 13.7 judgment see Judgment other proceedings, distinction …. 2.2, 2.3, 2.31, 2.41 overlapping proceedings see Multiple class actions overview …. 2.1, 2.3 pleadings see Pleadings preservation of procedures …. 33.12 criticisms of provisions …. 33.13 other Acts …. 33.14, 33.15 res judicata …. 28.10, 28.13, 28.16 earlier authorities …. 28.11, 28.12, 28.17–28.28 settlement see Settlement Res judicata representative proceedings …. 28.10, 28.13, 28.16 earlier authorities …. 28.11, 28.12, 28.17–28.28 Respondents amendment of group description …. 11.17 challenging proceedings …. 1.42, 1.43 communication with group members …. 32.52–32.53 case law …. 32.63–32.65 compliance with requirements …. 1.35, 1.36 cross claims …. 21.1–21.2 distribution costs see Excessive distribution costs funding arrangements, and …. 1.37 several respondents …. 1.18, 5.7 claims against all respondents …. 1.18, 4.41, 4.44, 4.49, 5.12, 5.13, 5.23 New South Wales …. 1.92, 1.93, 5.10–5.11, 5.24

standing …. 1.93, 5.8–5.11, 5.19–5.21, 5.24

S Security for costs after the event insurance …. 33.6 court orders …. 32.57, 33.4, 33.26 group members …. 33.1, 33.2–33.4 case law …. 33.19–33.29 class closure orders …. 33.4, 33.26 court’s considerations …. 33.2, 33.5 effect of provisions …. 33.3 New South Wales …. 33.9, 33.20 Queensland …. 33.9 saving of rights and powers …. 33.1–33.5, 33.19, 33.21–33.26, 33.29 Victoria …. 33.7–33.8, 33.27–33.29 litigation funding, and …. 1.39 overview …. 1.38, 33.1 Separate questions case examples …. 1.57–1.59 court’s powers …. 26.17, 32.13 overview …. 1.56 Settlement amendment of group description, and …. 11.8–11.11, 11.22, 11.23 class closure …. 1.67, 1.68, 22.27–22.28 court’s power …. 32.18, 32.54 include or exclude members …. 12.4, 12.5, 12.8 definition …. 22.6, 23.2 statistics …. 22.5 Settlement agreements authorisation of applicant …. 32.54

nunc pro tunc …. 32.54 execution of agreement …. 32.54 failure to seek approval …. 22.5 releases …. 22.30–22.31 authority to bind members …. 22.33 binding loan admissions …. 22.32, 22.68 Settlement approval applications for approval …. 1.74, 22.5, 22.8 notice requirements …. 1.74, 22.9–22.10, 24.9–24.11, 24.15, 24.16, 24.19–24.20, 24.21 practice note guidance …. 22.5, 22.8 binding loan admissions …. 22.32, 22.68 class closure …. 1.67, 22.27–22.28 conflicts of interest …. 22.3, 22.63 contradictors …. 22.19 costs …. 1.76, 22.19, 22.20–22.21, 22.67 court’s role …. 1.76, 22.2, 22.11, 22.14, 22.46, 22.59–22.60 criteria for approval …. 1.75, 22.4 disability or incapacity …. 7.8, 7.10, 7.12 distribution of money …. 1.78, 1.79, 22.34, 22.36 common fund orders …. 22.35 fair and reasonable …. 22.34, 22.36, 22.38–22.39, 22.48–22.52 distribution schemes …. 1.78, 22.36 amendments …. 22.34, 22.53–22.54 competing objectives …. 22.36 examples of workings …. 22.36 loss assessment formula …. 22.48–22.52 main features …. 1.78 ‘fair and reasonable’ …. 22.5, 22.13–22.17 all group members …. 22.16, 22.17, 22.58

case law …. 22.46–22.47, 22.48–22.52, 22.58, 22.61–22.65, 22.66 distribution of money …. 22.34, 22.36, 22.38–22.39, 22.48–22.52 lack of objections …. 22.18 relevant factors …. 22.13, 22.15 nine-factor test …. 22.15, 22.62 hearings …. 22.26 individual claims …. 22.7 individual claims of representative party …. 1.77, 23.1 applications for leave …. 23.2–23.4 conditional substitution applications …. 23.9, 23.11 notice to group members …. 23.6, 24.6 purpose of provision …. 23.1 standing, and …. 23.10 substitution …. 23.7–23.8, 23.9, 23.11, 23.12 withdrawal as representative party …. 23.5, 23.6, 23.7, 23.8, 23.11, 23.12, 24.6 lack of representation …. 22.3 lawyer’s role …. 22.11–22.12 litigation funding …. 1.76, 22.24 common fund orders …. 22.35, 22.69, 26.15 funding commissions …. 26.15, 26.18 notice requirements …. 1.74, 22.9 content of notice …. 22.10, 25.29 deficiencies in notice …. 24.19–24.20 dispensing with requirement …. 24.9–24.11, 24.15, 24.16, 24.21 form of notice …. 25.29 objections from group members …. 22.18, 22.19 overview …. 1.74, 2.1, 7.8, 22.1, 22.2, 22.7, 22.36, 32.18 payments …. 22.22–22.23 funding group members …. 22.25 litigation funders …. 1.76, 22.24

purpose of provision …. 22.1, 22.40 reimbursement payments …. 22.22–22.23, 35.4–35.8, 35.16–35.17, 35.19–35.20 incentive payments, as …. 22.23 practice note …. 35.6 validity …. 22.23 releases …. 22.30–22.31 authority to bind members …. 22.33 binding loan admissions …. 22.32, 22.68 sample approvals …. 22.37 statistics …. 22.5 sub-groups …. 22.41–22.45 Settlement distribution common fund orders …. 22.35, 22.69 distribution schemes …. 1.78, 22.36, 27.1, 27.6 amendments …. 22.34, 22.53–22.54 competing objectives …. 22.36 examples of workings …. 22.36 fair and reasonable …. 22.36 loss assessment formula …. 22.48–22.52 main features …. 1.78 fair and reasonable …. 22.34, 22.36 case law …. 22.38–22.39, 22.48–22.52 overview …. 1.78, 1.79, 22.34, 22.36 practice note …. 22.36 Shareholder class actions abuse of process …. 1.89, 10.18 class closure …. 10.18 non-common issues …. 17.9 opt-out notices …. 10.18

Small claims see Excessive distribution costs Standing see also Commencement of proceedings adequacy of representation …. 5.17 ceasing to have claim …. 5.18, 23.10 common law rule, and …. 5.4, 5.19 conferral of standing …. 5.3, 5.5 role of representative party …. 5.6, 5.22 definition …. 5.2 overview …. 5.2, 5.3 private law …. 5.3 several respondents …. 1.18, 5.7–5.9 case law …. 5.19–5.21, 5.24 New South Wales …. 1.93, 5.10–5.11, 5.24 statutory authorities …. 5.14, 5.15, 5.16 sufficient interest …. 1.20, 5.1, 5.15, 5.16 public interest …. 5.15 Stated case overview …. 1.56 Stay of execution cross claims …. 21.2 Stay on claims court’s powers …. 32.62 case law …. 32.68–32.69 Sub-groups ALRC recommendations …. 17.12 case law …. 17.17–17.19 costs …. 17.13, 17.20 representative party …. 17.13, 17.14, 17.20 discontinuance, and …. 17.16

overview …. 1.73, 2.24, 17.2, 17.11, 19.3 settlement offers …. 22.41–22.45

T Trial aim of trial …. 1.69, 1.70 common questions …. 1.69–1.72 overview …. 1.69 pleadings, and …. 9.16, 9.20 separate questions …. 32.13 remaining issues …. 1.73

U United States common fund …. 32.38, 35.10, 35.11 cy-près remedy …. 26.9

V Vexatious proceedings multiple class actions …. 1.50, 1.51 Victorian Law Reform Commission excessive distribution costs …. 14.3 cy-près remedy …. 14.9, 26.12

W Western Australia Law Reform Commission …. 1.8 Words and phrases see also Definitions ‘appropriate or necessary’ …. 32.8 ‘claims’ …. 4.8–4.11 ‘common question’ …. 4.24, 4.25, 9.17

‘judgment’ …. 28.5 ‘justice is done’ …. 32.8 ‘necessary’ …. 32.8 nunc pro tunc …. 32.54 ‘officer of the Commonwealth’ …. 6.5, 6.13 ‘person’ …. 4.6 ‘reasonably accurate assessment’ …. 26.6, 26.7, 26.22–26.23 ‘same, similar or related circumstances’ …. 1.19, 4.12, 4.20–4.22, 4.33 ‘some or all of them’ …. 1.41, 4.31 ‘substantial’ …. 4.30, 4.48 ‘substantial common issue of law or fact’ …. 1.19, 4.12, 4.23, 4.33 ‘sufficient interest’ …. 5.15, 5.16

Related LexisNexis Titles Cujes, Litigation in the Federal Court, 2015 Federal Civil Litigation Precedents, looseleaf and online High Court & Federal Court Practice and Procedure, looseleaf and online Legg, Resolving Civil Disputes, 2016